Option Investor
Printer friendly version
Jeff Bailey : 3/8/2007 2:27:40 AM

YM short entry alert here at 12,255, stop 12,262 and target 12,230.

Jeff Bailey : 3/8/2007 2:26:52 AM

Let's try one ...

Jeff Bailey : 3/8/2007 2:25:48 AM

USD/JPY 116.56

Jeff Bailey : 3/8/2007 2:25:34 AM

USD/JPY 116.73

Jeff Bailey : 3/8/2007 2:22:46 AM

EUR/JPY 153.56 ... YM 12,255

Jeff Bailey : 3/8/2007 2:21:08 AM

EUR/JPY 153.60 +0.45% Link ... YM 12,255 (just off overnight high of 12,260).

Jeff Bailey : 3/8/2007 2:19:58 AM

Check out that euro/yen cross rate chart, but live on a 60-minute interval.

Then check out the YM.

Jeff Bailey : 3/8/2007 2:09:04 AM

YM alert! 12,259 ... would be probing Wednesday's regular session high.

Jeff Bailey : 3/8/2007 2:04:17 AM

Good Gravy! Great Britain (Bank Of England) is also set to release an interest rate statement today (03/08/07) at 07:00 AM EST. Forecast is unchanged at 5.25%. Link

Jeff Bailey : 3/8/2007 1:59:29 AM

Forex Currency Cross Rates screen capture ahead of ECB's rate decision. Daily interval chart of euro/yen Link

Look familiar?

Jeff Bailey : 3/8/2007 1:52:23 AM

Forex Currency Cross Rates screen capture ahead of ECB's rate decision. 60-minute interval chart of euro/yen Link

Jeff Bailey : 3/8/2007 1:44:38 AM

Forex Currency screen capture ahead of ECB's rate decision Link

Jeff Bailey : 3/8/2007 1:39:28 AM

Oh gosh! There it was all along! The euro/yen cross rate Link

See the "link" at the top of Crosses ... No Jeff, that wasn't the "cross" on those flags above. Thats the cross rates I've been looking for. There's also the euro/yen "carry trade."

Jeff Bailey : 3/8/2007 1:33:42 AM

Dollar Index / SPX observation daily interval chart at this Link

For those that have followed any commentary over the years regarding the dollar's directional move, and influence of the STOCK market's (S&P 500 being a stock market) price action, should ALWAYS question such analysis.

It is most often the EQUITY BEAR that has said a RISING dollar is a signal for doom and gloom. But it has also been the EQUITY BEAR that has the a FALLING dollar is a signal for doom and gloom. Certainly there are the perma-bulls that say rising dollar=bull market euphoria, but falling dollar=bull market euphoria.

In recent sessions, you may have noticed my "focus" on the dollar/yen.

One level worth watching, or at least noting is the DXY's (a basket of weighted foreign currencies, largely the euro and yen) 83.91 level.

Today's (Wednesday's) relative high for the SPX after a recent sharp spat of selling was almost identical to its 11/24/06 close of 1,401.

I (Jeff Bailey) would say it is as "crazy logic" at this point to think further DXY weaknes = lower equity as it was "crazy logic" to have said the RUT.X was moving inverse of Treasury yields in recent months. Bears got their heads handed to them as YIELDS rose, then RUT.X bulls got their heads handed to them has YIELDS have fallen.

I'm currently trying to isolate the dollar/yen trade and measure its influence (if any) on the equity markets.

What have Treasury PRICES done in recent weeks? (see TLT as an example) and we KNOW that YIELDS have fallen. Why? More buyers than sellers (demand/supply).

When the dollar declines, what is happening? More supply than demand.

When money is flowing INTO Treasuries, but OUT of dollars, it has been an observation that equities pay a price.

What creats "jitters" among equity traders/investors is when a MARKET sees sharp and sudden moves in either the dollar, or Treasury YIELDS.

So what is behind this dollar/yen trade?

While there is talk that the euro should become the "benchmark world currency" instead of the dollar, until that comes to fruition, the dollar is still the "benchmark."

From there, investors will look at monetary policy benchmarks.

Here in the U.S. the target of Fed Funds is currently 5.25%. In Japan, they recently raised their rate to 0.50%.

The European Central Bank has their rate at 3.5% and many see the ECB raising 25 bp on Thursday to 3.75%.

Then, in Brazil, they've been CUTTING rates and Brazil's Central Bank is expected to cut its benchmark rate for a 14th consecutive time by 25 bp to 12.75% from 13%. Brazil's CB began cutting rates in September 2005 from a high rate of 19.75%.

Jeff Bailey : 3/8/2007 12:04:57 AM

This is an opportune time to observe what I believe is how a MARKET assesses RISK/REWARD among different securities like Treasuries (deemed one of the SAFEST) investments (backed by the full faith and credit of the U.S. Govt.) all the way to stocks/equities (deemed the RISKIEST) of investments (shareholders are last in line under bankruptcy laws).

On 02/02/07, one could have purchased the TLT for $87.21. At the time, its SEC yield was 4.712% (take monthly dividend of $0.3425 x 12-months; then divide by $87.21). When looking at tonight's P/L% (with dividend deduction from $87.21 cost basis) one may well think ... that's a big move! In just over one month, nearly an annual yield has already been found (if TLT were to just sit at $90.43 for another 12-months, the TLT from $87.21 entry would still yield just 4.712% assuming monthly dividend stayed at $0.3425/share.

That would be the REWARD.

Is there a BETTER opportunity elsewhere, in another security that offers GREATER REWARD that is WORTH THE RISK?

Cash? Treasuries (consider length of maturity)? Municipal bonds? High grade corporates? Junk bonds? Stocks?

THE MARKET is one of the BEST mechanisms for always finding the BEST risk/reward trade.

Jeff Bailey : 3/7/2007 11:37:58 PM

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

Note (1): For account/position management only, I've reduced the Basis for the 114 shares (full position) in the TLT by today's dividend distribution of $0.3425/share. Entry was $87.21 - 0.3425 = $86.8675.

Closed out the SFB-PN at $4.50 when SPY traded $140.24.

Established new SFB-QJ at SPY $139.51.

Jeff Bailey : 3/7/2007 11:08:53 PM

USD/JPY 116.397 x 116.42 +0.30% .... session low/high has been 115.569/116.580

Jeff Bailey : 3/7/2007 11:08:02 PM

YM +23 at 12,224

Jeff Bailey : 3/7/2007 11:07:03 PM

Closing Internals found at this Link

OI Technical Staff : 3/7/2007 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 : 3/7/2007 4:53:39 PM

April Crude Oil (cl07j) settled up $1.13, or +1.86% at $61.82.

Jeff Bailey : 3/7/2007 4:50:40 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 3/7/2007 4:29:31 PM

EOD analysis : I do think it important for traders to continue to monitor the yen "carry trade." Also important to note what influence March's "Max Pain" theory may be having into Friday's quarterly option expiration.

Jeff Bailey : 3/7/2007 4:25:39 PM

USD/JPY 116.055 x 116.089

Jeff Bailey : 3/7/2007 4:24:27 PM

Buy Program Premium ... YM 12,197

Jeff Bailey : 3/7/2007 4:18:11 PM

Dividend Distribution alert! ... Traders/investors that are long my iShares Lehman 20-year (AMEX:TLT) should have received their dividend of $0.3425/share today.

Keene Little : 3/7/2007 4:00:12 PM

The DOW 30-min chart looks similar to the SPX where I show two possibilities for what's next. Today's bounce could have finished the correction to the decline and a drop through 12090 would elevate that to a higher probability. In the meantime, if we're to get a b-wave pullback into tomorrow and it meets its normal Fibs in time and price then it should find support around 12150 around mid day tomorrow and then start another rally leg in wave-c. Link

All the Fibs make it somewhat confusing to see this but in addition to the Fib time projection and price retracements, I show a price projection for wave-c from a pullback to about 12150 and it's at 12355 for two equal legs up in the bounce (wave-c = wave-a in time and price). That's very close to a 43% retracement for the 2nd wave and again falls on Monday, and at the same time smacks its head on the dowtrend line from the February high. This setup would be a MoAP (mother of all puts) opportunity.

Sorry for all the lines on the chart but I'm trying to show you that I don't draw price projections on my charts willy nilly. Believe it or not there's some science (OK, math) behind them.

Jeff Bailey : 3/7/2007 3:59:34 PM

USD/JPY 116.011 x 116.041

Jeff Bailey : 3/7/2007 3:58:49 PM

YM 12,194

Jeff Bailey : 3/7/2007 3:58:18 PM

VIX.X 15.25

Jeff Bailey : 3/7/2007 3:57:42 PM

Swing trade put alert for one (1) of the SPY May $140 Puts (SFB-QJ) at the offer of $3.30.

SPY $139.51 -0.14% ...

Jeff Bailey : 3/7/2007 3:50:03 PM

YM 12,217

Jeff Bailey : 3/7/2007 3:49:42 PM

Alert! USD/JPY 116.197 x 116.227 ... breaks session lows.

Jeff Bailey : 3/7/2007 3:47:21 PM

Sell Program Premium ... YM 12,210 : SPY $139.68

Jeff Bailey : 3/7/2007 3:46:43 PM

USD/JPY 116.247 x 116.277

Jeff Bailey : 3/7/2007 3:43:51 PM

Alert! New Zealand's Reserve Bank raises rates 25 bp to 7.50% (consensus was for 25 bp rate increase).

Keene Little : 3/7/2007 3:41:38 PM

Just playing the trend lines on the DOW (similar for SPX) would have had you shorting the retest of the broken uptrend line from mid day today. And now if the DOW retests its broken uptrend line from Monday, currently near 12244, I'd look to short it there. It may not get back up there but if it does, smack it. Link

Jane Fox : 3/7/2007 3:34:34 PM

I am now stopped and I certainly hope it is not a the low of this sell program. YM 12220.

Jeff Bailey : 3/7/2007 3:34:04 PM

TRIN 0.95

Jeff Bailey : 3/7/2007 3:33:49 PM

NYSE a/d 1,789/1436

Jeff Bailey : 3/7/2007 3:32:56 PM

USD/JPY 116.303 x 116.337

Jane Fox : 3/7/2007 3:32:49 PM

Well I am still hanging in there and my long has not been stopped - yet. However, it is not looking good.

Jeff Bailey : 3/7/2007 3:32:01 PM

VIX 14.70 ... comes to monthly pivot. Hand check here.

Jeff Bailey : 3/7/2007 3:31:24 PM

Sell Program Premium ym 12,225 : spy $139.91

Jeff Bailey : 3/7/2007 3:27:17 PM

If the dollar falls overnight, and majors "gap" modestly higher in the morning, to their weekly pivots, then there's the setup for a gap and slap.

Jeff Bailey : 3/7/2007 3:25:52 PM

If the dollar holds its WEEKLY Pivot and rebounds overnight ... then the "bearple" aren't going to think one-day wonders.

Keene Little : 3/7/2007 3:24:30 PM

I wouldn't be a bit suprised to see the DOW held in positive territory today. We don't want the sheeple to think yesterday's rally was a 1-day wonder.

Jane Fox : 3/7/2007 3:24:07 PM

And no sooner do I suggest higher highs and we see a sell program.

Jeff Bailey : 3/7/2007 3:24:04 PM

SPY $140.08

Jeff Bailey : 3/7/2007 3:23:48 PM

YM 12,238

Keene Little : 3/7/2007 3:22:46 PM

And there's the break.

Jeff Bailey : 3/7/2007 3:23:38 PM

DXY 83.78 -0.29% (30-min delayed)... session low 83.75 .... juuuuust above WEEKLY Pivot.

Jeff Bailey : 3/7/2007 3:23:29 PM

USD/JPY 116.327 x 116.357 (live)

Keene Little : 3/7/2007 3:19:13 PM

If the DOW presses a little higher it's looking like it could be in a small ascending wedge with the bearish divergence supporting the view that we're about to get at least a deeper pullback. Watch for a break of its uptrend line from Monday afternoon, currently near 12238. Link

Jane Fox : 3/7/2007 3:17:57 PM

VIX hovering around daily lows suggest we have higher highs in our future.

Jeff Bailey : 3/7/2007 3:17:47 PM

03:00 Internals found at this Link

Keene Little : 3/7/2007 3:15:41 PM

The market is holding up since the dip into the 2:15 low but it looks very choppy and hints of another leg down coming, perhaps into the close.

Jeff Bailey : 3/7/2007 3:07:17 PM

Excellent, excellent comments from CNBC's Rick Santelli ... I'd only add option expiration ...

Jeff Bailey : 3/7/2007 3:06:40 PM

03:00 Market Watch found at this Link

Jeff Bailey : 3/7/2007 3:00:27 PM

No "surprise" on the refinance side of things ... see 02/27/07 03:18:33 PM

Jeff Bailey : 3/7/2007 2:54:21 PM

MBA's Weekly Application Survey ... at this Link ...

Jane Fox : 3/7/2007 2:51:01 PM

Here is a summary of the FED's beige book
WASHINGTON (MarketWatch) - The U.S. economy is growing at a modest pace, but some slowing has been seen in about a third of the country, the Federal Reserve reported Wednesday in its Beige Book.

Most of 12 Federal Reserve banks "reported modest expansion in economic activity," the Beige Book said. "But several districts noted some slowing," including New York, St. Louis, Boston and Dallas. The economy improved slightly in the Philadelphia region.

Housing markets remained weak, although there were "signs of stabilization" in some areas. Manufacturing activity was "steady or expanding," despite the weakness in auto- and housing-related production.

Retail sales were said to be growing steadily. Auto sales were sluggish.

Inflation was "little changed." Pay increases were "moderate."

Jeff Bailey : 3/7/2007 2:51:06 PM

Beige Book: Most Regions Had "Modest" Economic Growth

DJ Summary- U.S. economic growth continued at a "modest" pace in most parts of the country through late February, while inflationary pressures were little changed, the Federal Reserve said Wednesday in its Beige Book report.

While the pace of economic activity varied across the country, the Fed's 12 districts generally reported that retail sales growth was steady, factory output was stable or stronger and services demand continued to expand, according to the report.

"Almost all districts reported that housing markets remained weak, but signs of stabilization were noted in several districts," the Fed report said. "In contrast to the housing sector, commercial real estate markets continued to firm or remained solid."

Home prices were generally "flat or declining" in the latest period surveyed, and some districts reported further contraction in housing market activity, the report said. But residential real estate conditions differed sharply across regions, with the Richmond and New York districts reporting signs of stability or strength.

The Fed reported little new inflationary pressure on balance, despite some signs of sharper wage gains.

"Price pressures were little changed overall," the latest Beige Book said. Some districts said input prices eased for energy and construction materials like lumber and copper, while others said food-processing costs were up sharply and steel prices were rising due to strong global demand.

Jeff Bailey : 3/7/2007 2:48:11 PM

Fed's Beige Book at this Link

Jane Fox : 3/7/2007 2:47:33 PM

Gold is now testing its resistance zone and the 50EMA. Link

Jeff Bailey : 3/7/2007 2:45:21 PM

YM 12,246

SPY $140.22

Jeff Bailey : 3/7/2007 2:45:05 PM

USD/JPY 116.288 x 116.317

Jeff Bailey : 3/7/2007 2:44:28 PM

30-minutes ago, when USD/JPY was 116.275 bid, DXY was 83.84.

Jane Fox : 3/7/2007 2:38:49 PM

WASHINGTON (MarketWatch) -- Regulators obtained an order freezing $3 million in assets contained in a Latvian bank's U.S. trading account after the account was allegedly used in a "pump-and-dump" scheme involving 15 different public companies, the Securities and Exchange Commission said Wednesday.

The agency said the scheme used online trading accounts at E-Trade (ETFC), TD Ameritrade (AMTD) and others to net at least $732,941 in illegal profits, costing the brokerages about $2 million in losses.

The $3 million in assets were frozen as a result of a court order issued Tuesday. It's the largest asset freeze ever obtained by the SEC. The SEC said that unknown foreign traders bought shares of 15 Nasdaq-traded companies from at least December 2005 through December 2006 using a trading account in the name of JSC Parex Bank.

Keene Little : 3/7/2007 2:35:40 PM

They're not making it easy to stay on the short side here. So far it's looking like a choppy start to a pullback, which fits as the start of a b-wave. It will likely be choppy and full of whipsaws.

Keene Little : 3/7/2007 2:26:49 PM

On that little spike up both the DOW and SPX tested their broken uptrend lines from the mid-day lows. Nice kiss goodbye so far. That last bounce needs to hold--any higher again and I wouldn't trust the downside.

Jeff Bailey : 3/7/2007 2:24:33 PM

Walgreen (WAG) $44.04 -0.92% ... WEEKLY Pivot at $44.37 ... March's "Max Pain" Theory currently tabulated at $45.00 ($2.50 inc)

April's "Max Pain" tabulated at $45.00.

Jeff Bailey : 3/7/2007 2:20:45 PM

Should note that USD/JPY high has been 116.882

Want/need to be open to the upside too.

Jane Fox : 3/7/2007 2:16:56 PM

TICKS are quite bullish today. Link

Jane Fox : 3/7/2007 2:17:12 PM

AD line as made a high of 737 today but has now slipped back to +436.

Jeff Bailey : 3/7/2007 2:16:00 PM

Could be an exciting last hour of trade today ...

Jane Fox : 3/7/2007 2:15:05 PM

A 38.20% retrace of today's YM range is right at the PDH so I expect it to hold as support. Of course I could be wrong and I have my stop in case I am.

Jeff Bailey : 3/7/2007 2:15:04 PM

Oh ... and those Daily Pivot/Daily R1.

Jeff Bailey : 3/7/2007 2:14:25 PM

It's yen against "Max Pain" ...

Keene Little : 3/7/2007 2:13:01 PM

Now pull your stop down to just above that last little spike up (should get it to near break even) and just sit tight and let it work or not. If we're starting a b-wave pullback you're not going to want to trade it--let it finish and we'll cover and get long, maybe tomorrow. If we've started the next big leg down we won't want to cover until the end of the month (wink).

Jeff Bailey : 3/7/2007 2:13:20 PM

USD/JPY 116.275 x 116.30 -0.27% ... earlier session low was 116.23 ... day trader's only

Jeff Bailey : 3/7/2007 2:11:07 PM

YM 12,226

Jane Fox : 3/7/2007 2:06:54 PM

I guess I am going against the grain here today. I think this last dip is a dip to buy.

Keene Little : 3/7/2007 2:06:10 PM

If stopped out with a new high just be ready to hit it again since we should get a pullback after a 5-wave move up off Monday afternoon's low.

Keene Little : 3/7/2007 2:05:12 PM

If you shorted that last high I'd now bring my stop down to a couple ticks to a new high. Keep your risk small and we'll see if this works now.

Jeff Bailey : 3/7/2007 2:04:39 PM

CAT's WEEKLY Pivot right here at $64.52.

Keene Little : 3/7/2007 2:03:35 PM

The reason I like an attempt at a short play here is because of the possibility for the correction to be over with this leg up. I prefer the wave count that calls for just a b-wave pullback into tomorrow (which means only a scalp short play) but if price starts dropping hard and fast then the wave count on this chart would start to look better, which calls for new lows before the week is out. Again, this is not my preferred count but a possibility. Link

Jeff Bailey : 3/7/2007 2:03:04 PM

CAT $64.51 +1.39% ... March's "Max Pain" theory currently tabulated at $62.50 ($2.50 increments).

April's "Max Pain" theory tabulated at $67.50.

Jeff Bailey : 3/7/2007 1:57:22 PM

The "reason" I added the $1.40 to the $140 strike is to get a level where a NAKED CALL squeeze could develop.

Recent "Max Pain" theory for SPY was tabulated at $141.00.

Keene Little : 3/7/2007 1:54:12 PM

SPX and DOW are hitting their initial Fib targets where I'd look this over carefully for a short play now, normal stop level of about 20 YM and 2 ES points.

Jeff Bailey : 3/7/2007 1:50:55 PM

Note the CBOE action in the SPY $140 Calls.

$140 +1.40 = $141.40

Jeff Bailey : 3/7/2007 1:49:38 PM

VIX 14.53 -8.95% ... breaks below MONTHLY Pivot.

Jeff Bailey : 3/7/2007 1:49:08 PM

SPY Options Montage at this Link

Jeff Bailey : 3/7/2007 1:41:26 PM

Hands at my side ...

Jane Fox : 3/7/2007 1:40:11 PM

I am long YM and am glad I did not use my old standby ER. It is not even to new daily highs yet.

Jeff Bailey : 3/7/2007 1:39:19 PM

SPY 140.38 0.48% ... MONTHLY 38.2% retracement

Jane Fox : 3/7/2007 1:38:14 PM

Ok who is really glad the VIX and the AD volume told you NOT to be short? Raise your hands.

Jeff Bailey : 3/7/2007 1:38:13 PM

VIX.X 14.92 -6.51% ...

Jeff Bailey : 3/7/2007 1:37:29 PM

Swing trade put close out alert ... for the remaining SPY Apr. $144 Put (SFB-PN) at the bid of $4.50.

SPY $140.24 +0.38% ... an idea where it's going.

Jane Fox : 3/7/2007 1:37:05 PM

That last post was just another example of people not taking responsibility for themselves and expecting the government to step and take over. Maybe Ok for those who don't take care of business (like this dude Wannemacher) but the ones who lose are those of us who do take care of business. I would have never got myself into a situation described below and it urks me that those that do get prime time billing.

Jane Fox : 3/7/2007 1:34:33 PM

WASHINGTON (MarketWatch) -- A U.S. Senate panel on Wednesday told credit card companies to change their practices related to late fees, penalty interest and disclosure and promised to keep a close eye on the industry, saying its practices keep millions of Americans in debt.

"By nickel and diming tens of millions of consumer accounts, credit card issuers reap large profits," said Sen. Carl Levin, D-Mich., chairman of the Permanent Subcommittee on Investigations.

"It is clear that credit card issuers charge interest and fees in ways that produce enormous profit," Levin said.

He cited as an example an Ohio credit card holder named Wesley Wannemacher, who recounted for the Committee how he wound up paying $6,300 on a $3,200 Chase credit card debt and still owed $4,400. He was charged $4,900 in interest, $1,100 in late fees and $1,500 in over-the-limit fees. Chase eventually forgave the remainder of what Wannemacher owed, but Wannemacher said Chase only told him that after he was called to testify before the subcommittee.

Keene Little : 3/7/2007 1:28:39 PM

Referencing the SPX 15-min chart I had posted earlier (12:00)--updated here: Link , we're getting the leg up that should complete a 5-wave move up from Monday afternoon. This should set up the wave-b pullback into tomorrow. Because there is the possibility (slim in my opinion) that this leg up is completing the entire correction, it's worth trying a short up here in case the decline gets going again.

Jane Fox : 3/7/2007 1:27:13 PM

YM has broken its PDH but no new highs yet.

Jane Fox : 3/7/2007 1:26:54 PM

ES has now broken its PDH and on to new daily highs.

Jane Fox : 3/7/2007 1:18:13 PM

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

Jane Fox : 3/7/2007 1:17:09 PM

YM is having a hard time getting through its PDH but I think it will. Then daily highs will be resistance as well.

Jane Fox : 3/7/2007 1:16:11 PM

The VIX and AD volume are telling you you should be long but the AD line at +348 is telling you don't try for the home runs you were able to hit yesterday but only try for singles today.

Jeff Bailey : 3/7/2007 1:03:41 PM

01:00 Market Watch found at this Link

Jane Fox : 3/7/2007 12:52:33 PM

NEW YORK (MarketWatch) -- Clearwire Corp., a wireless broadband firm founded by billionaire Craig McCaw and backed by Intel and Motorola, breaks a lull in the market for initial public offerings with its $500 million debut expected Thursday.

Clearwire is the first of three high profile IPOs this week along with Xinhua Finance and Sourcefire after a traditional late-winter quiet stretch in the market for new issues as debutantes tabulate their fourth-quarter results ahead their market splashes.

Although the IPO market appears to be on steady footing after last week's global sell-off, expectations for huge gains in the new issues market have been pared back.

Clearwire plans to offer 20 million shares at $23-$25 a share in a bid to raise about $480 million with 10 underwriters including Merrill Lynch, Morgan Stanley and J.P. Morgan for trading under the symbol CLWR on the Nasdaq.

Jane Fox : 3/7/2007 12:49:28 PM

But be aware YM is now bumping up against its PDH and could find resistance.

Jane Fox : 3/7/2007 12:49:00 PM

Also if you want to try a long I would use YM, it is your stronger market today.

Jane Fox : 3/7/2007 12:48:16 PM

If you use the Open as your fulcrum, flat below and long above you should be OK today.

Jane Fox : 3/7/2007 12:47:35 PM

AD line at a paltry +281 though so don't expect too much if long.

Jane Fox : 3/7/2007 12:47:01 PM

Bulls have grabbed the reins back again. VIX to new daily lows and AD volume to new daily highs.

Jeff Bailey : 3/7/2007 12:39:38 PM

TRIN 0.81

Jeff Bailey : 3/7/2007 12:38:42 PM

YM 12,218

Jeff Bailey : 3/7/2007 12:38:34 PM

Would go for another YM short, but not with that a/d line.

Jeff Bailey : 3/7/2007 12:38:14 PM

NYSE a/d line now 1,619:1,512

Jeff Bailey : 3/7/2007 12:34:18 PM

Then you've got the QQQQ $42.79 ... DAILY Pivot right here at $42.78.

Jeff Bailey : 3/7/2007 12:33:27 PM

SPY ... here too a day trader's 5-minute interval chart Link ... certainly has the look with YM that things are squared up at supports.

Jeff Bailey : 3/7/2007 12:27:46 PM

Hmmmm ... me thinks better YM short setup, or stop placement was above 12,226 ... say 12,227

Jeff Bailey : 3/7/2007 12:21:00 PM

USD/JPY 116.282 x 116.312

Jeff Bailey : 3/7/2007 12:20:33 PM

YM 12,210 ... that "pop high" was 12,220 ...

Jeff Bailey : 3/7/2007 12:12:18 PM

USD/JPY 116.362 x 116.392

Jeff Bailey : 3/7/2007 12:11:45 PM

YM 12,215 .... wouldn't let a short go much above 12,220.

Jeff Bailey : 3/7/2007 12:11:09 PM

Was on the phone with contractor.

Jeff Bailey : 3/7/2007 12:10:51 PM

YM short stopped alert ... 12,217

Keene Little : 3/7/2007 12:00:18 PM

From a much shorter term perspective, this SPX 15-min chart shows the potential for another move higher today before setting up the b-wave pullback into tomorrow to be followed by wave-c into Friday/Monday. Link

In the move up from Monday's low we so far have a 3-wave rally to yesterday's high (labeled wave-(iii) on the chart). This could instead be an a-b-c for wave-A and we're already into wave-B pullback so be careful about trying to buy this dip. If we do get another push higher then I like the Fib projection at 1400 for a high (62% of wave-(i) since the 1st and 3rd waves are nearly the same).

If SPX drops below 1389.11, the high for wave-(i), then it's more likely we're already into wave-B (in which case expect lousy choppy trading).

Jeff Bailey : 3/7/2007 12:00:18 PM

Citigroup (C) $50.31 -0.53% ... its DAILY Pivot $50.33 ... will have to do.

Jane Fox : 3/7/2007 12:00:10 PM

I am not trading until I see a much clearer picture.

Jeff Bailey : 3/7/2007 11:59:40 AM

YM 12,208

Jeff Bailey : 3/7/2007 11:59:31 AM

I would think the BKX.X (big money center banks) would be more inline with currency trade.

Jeff Bailey : 3/7/2007 11:58:33 AM

Could sure use a BKX.X feed here. BIX.X 390.41 -0.55% juuuuust under its DAILY Pivot.

Jeff Bailey : 3/7/2007 11:54:29 AM

YM day trader's 5-minute interval chart at this Link

Jeff Bailey : 3/7/2007 11:43:09 AM

DXY 83.97 -0.07% (30-minute delayed) ... noting high of 84.10 overnight was juuuust under its DAILY Pivot.

Jeff Bailey : 3/7/2007 11:42:08 AM

USD/JPY 116.362 x 116.392 -0.20% Link

Jeff Bailey : 3/7/2007 11:38:05 AM

So far ... I'd have to say that market participants still committed to the "Max Pain" theory levels.

Might change quickly on moves below DAILY Pivots.

Jeff Bailey : 3/7/2007 11:37:13 AM

YM 12,198 ... DAILY Pivot 12,180 ...

Keene Little : 3/7/2007 11:37:07 AM

I was asked for some suggestions on option plays for the OEX. I know many of you trade OEX options including spread positions so I thought I'd show its chart to help you identify key levels for your trades. Even though volatility is picking up some, and eventually trading OEX puts on a short term basis might work again (the slippage can kill you), I think it's best to use OEX options for position plays. If you want to trade directionally, such as long calls or puts, buy a lot more time than you think you'll need. Don't get trapped into being right about direction but wrong on the time factor and watch your premium decay to nothing.

The best plays in a low volatility market have been selling spreads such as the ones Mike Parnos does every month. But that environment is about to change and you'll need to be a lot more careful about selling spreads than you're probably used to. The higher volatility will mean much bigger moves against your position. You'll need to sell further OTM (out of the money) and still you'll have some gut-wrenching days as you see the market head right for you.

Selling bull put spreads could be particularly dangerous, and painful. The kind of downside move I see coming means you won't be able to sell far enough OTM to be safe. I do not recommend any bull put spreads at this time, period. Maybe in April but not now. If you're currently in any I would exit them on this week's bounce. If I'm wrong on this you will have lost some profit (maybe) or taken a small loss. If I'm right and you do not exit, you will feel some significant pain in a couple of weeks.

And that's my public service announcement for the day. Now to the chart: Link OEX is nailing its Fib levels and this is very encouraging as we go forward. Its rally failed at the 62% retracement of the 2000-2002 decline (671) and it bounced this week off its 38% retracement of the July-February rally (just under 630). I see the potential to drop next to its 62% retracement of the rally (604), bounce and then continue down to about 586 as we head into April.

From there a bounce into May and then it'll get hammered down into the summer. We should find a firm bottom for the start of a big correction in October that runs into the end of the year. As always, these projections are only conjecture that's based on "normal" wave movements and I'm using the most common Fib retracements and time/price projections. This projection will clearly change as it unfolds and I'll use the short term patterns to keep it current but I'm hoping this will help you establish some initial trading plans.

As for risk management if you enter some bearish plays this week, any rally above 662, a 78.6% retracement of the decline, would tell me we're very likely going to continue rallying to new highs. That's not as helpful as I'd like (in trying to keep stops closer) but it's unfortunately the risk we have since a wave-2 bounce could go that high and not negate the probability that we've got wave-3 down next. If you want to sell some bear call spreads, sell them above 660. Link

Jeff Bailey : 3/7/2007 11:36:45 AM

SPY $139.44 -0.18% ... probing DAILY Pivot.

Jeff Bailey : 3/7/2007 11:32:25 AM

YM short alert 12,189 here, stop 12,217, target 12,070

Jeff Bailey : 3/7/2007 11:20:22 AM

Very "perplexing" EIA figures this morning.

Jeff Bailey : 3/7/2007 11:17:33 AM

11:00 Internals at this Link

Yesterday's internals at this Link

Jane Fox : 3/7/2007 11:16:59 AM

New daily lows except for YM. Once again if you want to try a long position YM is the market to pick, although long is not the way I would go right now. Flat is where I am.

Jane Fox : 3/7/2007 11:14:48 AM

Things have turned more bearish now with AD line back to -303 and AD line under 0.

Jeff Bailey : 3/7/2007 11:03:03 AM

11:00 Market Watch found at this Link

Jeff Bailey : 3/7/2007 10:52:06 AM

My Day's of Supply for Crude Oil fell to 21.68 from prior week's 21.91. (based off of Gross Inputs into Refineries)

Jeff Bailey : 3/7/2007 10:50:59 AM

EIA: US Weekly Percent Utilization of Oper. Capacity edged down to 85.83% from prior week's 85.98%.

Jeff Bailey : 3/7/2007 10:49:49 AM

EIA: US Weekly Refinery Operable Capacity unchanged at 17,400 B/D.

Jane Fox : 3/7/2007 10:49:39 AM

AD line is still neutral at +196 but at least it is above 0.

Jeff Bailey : 3/7/2007 10:42:21 AM

EIA: Weekly Gross Inputs into Refineries fell by 25,000 B/D to 149.35 M B/D.

Jeff Bailey : 3/7/2007 10:41:19 AM

EIA: Weekly Crude Oil Inputs rose by 141,000 b/d to 147.57 M B/D.

Jane Fox : 3/7/2007 10:39:59 AM

SAN FRANCISCO (MarketWatch) -- Pfizer Inc. (PFE) said Wednesday the Food and Drug Administration has approved its cholesterol-lowering drug Lipitor for five new indications in patients with heart disease. The FDA has approved the drug to reduce the risk of nonfatal heart attacks, fatal and non-fatal strokes, certain types of heart surgery, hospitalization for heart failure, and chest pain in patients with heart disease, New York-based Pfizer said. Previously, Lipitor was approved to reduce cardiovascular events in patients without heart disease. Pfizer shares rose 26 cents rose $24.45 in Wednesday morning trade.

Jane Fox : 3/7/2007 10:38:54 AM

* NYSE advancers outnumber decliners 16 to 14
* Nasdaq decliners outnumber advancers 14 to 12
* Dow industrials advancers outnumber decliners 17 to 13

Jeff Bailey : 3/7/2007 10:38:39 AM

SPR Stockpiles fell by 1,000 barrels to 688.604 million barrels.

Jeff Bailey : 3/7/2007 10:36:58 AM

EIA: Weekly Heating Oil Stockpiles down 1.47 million barrels.

Keene Little : 3/7/2007 10:36:38 AM

I show only one possibility for the RUT because of its cleaner pattern which tells me to expect an a-b-c bounce to correct its decline. Notice that a 43% retracement for wave-2 is at the gap close (790.60) from March 2nd. If the RUT sets up like this you'll definitely want to short it. The usual caveats of course--use appropriate risk management, use stops, don't eat yellow snow, etc. Link

Jeff Bailey : 3/7/2007 10:36:11 AM

EIA: Weekly Kerosene-Type Jet Fuel Stockpiles up 26,000 barrels.

Jeff Bailey : 3/7/2007 10:35:25 AM

EIA: Weekly ULS Diesel Stockpiles down 214,000 barrels.

Jeff Bailey : 3/7/2007 10:34:25 AM

EIA: Weekly Total Distillate Stockpiles down 7.26 million barrels.

Jeff Bailey : 3/7/2007 10:33:50 AM

EIA: Weekly Reformulated Gasoline Stockpiles down 133,000 barrels.

Jeff Bailey : 3/7/2007 10:33:22 AM

EIA: Weekly Total Gasoline Stockpiles down 3.75 million barrels.

Jeff Bailey : 3/7/2007 10:32:50 AM

EIA: Weekly Crude Oil Stockpiles down 4.84 million barrels.

Jeff Bailey : 3/7/2007 10:32:14 AM

Sell Program Premium ... SPY $139.85

Keene Little : 3/7/2007 10:28:18 AM

Different index (SPX), same setup. Looking for an eventual rally up to around 1415-1417 before it's ready for wave-3 down. Once we get a pullback, assuming we're going to get the a-b-c bounce shown in light red, we'll then be able to do some projections for wave-c and hopefully set our sights on where the upside target will be. Link

Jeff Bailey : 3/7/2007 10:27:36 AM

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

Keene Little : 3/7/2007 10:19:49 AM

Not to bias you off track, and this actually fits with your thinking of a rally into the end of the week, however, the old "mega banks trading technique" begins to look like a viable strategy. Could they be running it up on the Thursday before Opex (like they used to pull it back when we were rallying), and be buying puts for next week when they'll flush us out to the downside?

I guess the answer would be "probably not" because it's too obvious, and we all know what they say about a play being too obvious. Anyway, have been thinking about this ever since we began to try to rally and just had to vent/voice it to you since you were the one who detected their trading pattern way back.

Mike, I was thinking exactly the same thing and thought I'd mention it if it looks to be setting up that way. So far I see the EW pattern setting it up exactly the way you describe. And yes, the mega banks' trading teams could very well load up on March puts as the public gets sucked in on a strong rally, convinced that the market is headed to new highs for the year. If we see another spike in the OEX put/call ratio then we'll know smart money is thinking this is just a bounce.

Keene Little : 3/7/2007 10:08:09 AM

The same two possibilities that I discussed for the DOW are true for the others as well. This NDX 60-min chart is an update of yesterday's. It takes a stronger rally to get up near 1765 today before I felt it was ready for the more immediately bearish possibility shown in dark red. The more probable price pattern in my opinion is the a-b-c correction shown in light red. Link

The wave-b pullback (light red) could go much deeper than what I show (back towards yesterday's low) so don't let that trap you into thinking the next big leg down has started, at least not from here. It should be a setup for the wave-c rally into the end of the week or Monday (where the 62% of wave-1 time projection is located).

Jeff Bailey : 3/7/2007 10:04:04 AM

DJUSHB 653.29 +0.09% .... (not +2.00% per Market Watch)

Jeff Bailey : 3/7/2007 10:02:00 AM

10:00 Market Watch found at this Link

Jane Fox : 3/7/2007 9:58:26 AM

Here is your daily chart of Gold. I will not go long GLD until I see what happens with that big resistance zone. Link

Keene Little : 3/7/2007 9:55:53 AM

Using the DOW 30-min chart I show the two possibilities as I currently see them. One is that the current bounce will end the upside correction and will immediately head south (shown in red), which is why it will be worth testing the short side after a push higher today, or the other is that we'll just get a choppy wave-b pullback into tomorrow before setting up the next leg higher in the bounce (shown in green). Link

As I've mentioned several times, there's a Fib turn date for the DOW on Friday Mar 9, +/- a few days. I've also mentioned that the most common retracement for a wave-2 correction (what I believe we're in) is 43% so I put that on the chart. Interestingly that 43% retracement at 12368 intersects the downtrend line off the initial highs on Monday morning.

In the meantime, if the DOW can bounce a little higher this morning, it should then set up a pullback. If the bulls really get it going today then watch for resistance around its 30-min 100-pma at 12295. The bounce high at 12289 on Mar 1 could also be resistance.

Jane Fox : 3/7/2007 9:54:34 AM

With that in mind I see that YM has broken its PDH so may be a good market to trade today.

Jane Fox : 3/7/2007 9:54:01 AM

More conservative traders may want to wait until PDHs have broken because on a day like today those levels will be resistance. Link

Jane Fox : 3/7/2007 9:51:51 AM

Internals are not as bullish as yesterday (to be expected) but they are getting more bullish so I would be thinking about buying dips. Use the open as your fulcrum.

Jane Fox : 3/7/2007 9:48:51 AM

VIX making new daily lows and AD volume making new daily highs - just like the old days.

Jane Fox : 3/7/2007 9:47:36 AM

Things are looking a lot more bullish now.

Jane Fox : 3/7/2007 9:42:01 AM

NEW YORK (MarketWatch) -- Crude-oil futures were higher early Wednesday as traders braced for weekly data on supplies that are expected to show another draw in gasoline and distillates but an increase in crude inventories.

Steady global equity markets and a cold snap in the northeastern U.S. were providing support although temperatures are forecast to return to more normal levels in the coming days.

Crude for April delivery was up 20 cents at $60.89 a barrel in electronic trade. On Tuesday, the contract closed higher in a recovery from a nearly two-week low hit the previous session. Gains on Wall Street, where the Dow Jones Industrial Average posted its best one-day point rise since July, 2006, supported the commodity sector which had been caught up in last week's sell-off across global equity markets.

Supply data will be a key focus Wednesday with separate reports due at 10.30 a.m. Eastern from the Energy Department and the American Petroleum Institute.

Jane Fox : 3/7/2007 9:34:13 AM

VIX open within its PDR as does the TRIN at 0.86. Nothing to tell me one way or the other yet so I will remain on the sidelines.

Jane Fox : 3/7/2007 9:33:11 AM

AD line at -437 is neutral with a bearish flavor.

Jane Fox : 3/7/2007 9:30:37 AM

I suspect the SPX to get back to at least test the 50EMA at 1423 but once it gets there it will be real interesting to see if this support turned resistance will remain as tough a resistance as it did a support. Link

Jane Fox : 3/7/2007 9:27:21 AM

Gold is heading back to test its support turned resistance zone on the daily charts and tested its PDH overnight. The US $ is heading down which should help Gold continue upwards as will Crude breaking its PDH. Link

Jane Fox : 3/7/2007 9:22:51 AM


Jane Fox : 3/7/2007 9:23:10 AM

I guess you could call the overnight session bearish because there are lower lows and highs but I think calling it sideways fits better.

I have noticed a shift in the AD line and volume lately in that it is helping to describe what is going on under the hood whereas it used to be the indicator to tell me what is happening now. Yesterday was a very good example. The AD volume was making new highs all day and the AD line was above +1700 all day yet the price early on was able to make new daily lows. At this time these two were not reflecting what was happening right now but they did help me stay long, although it took me a few tries, but I did eventfully get the nice rally.

Keene Little : 3/7/2007 9:18:56 AM

Futures chopped lower overnight but there's nothing that's particularly bearish in the pattern. It's possible we'll see a small pullback this morning followed by another push higher today and that would give us a 5-wave advance off Monday's low. If that happens it would be worth testing the short side since it's possible the correction to the decline could be complete at that point.

Because the advance off the Monday low is a 3-wave move so far, a deeper pullback today should lead to another rally leg (in which case I'm looking for a Friday/Monday top). If after a new high today (one that will be worth shorting) the succeeding pullback gets very choppy then that will also tell us there's a good chance for more upside which is the way I'm leaning at the moment. Just keep remembering that surprises will be to the downside now.

Jane Fox : 3/7/2007 9:04:57 AM

WASHINGTON (MarketWatch) -- U.S. private-sector employment grew by 57,000 in February, the weakest job growth since July 2003, according to the ADP national employment index released Wednesday.

Job growth in February was about a third of the 167,000 averaged over the previous three months. The ADP index rose by 126,000 in January.

The ADP index, produced by Macroeconomics Advisers LLC for Automatic Data Processing Inc. (ADP) , is considered the single-best indicator of the government's monthly nonfarm payroll report, which will be reported on Friday. Adding in some 20,000 government jobs created in a typical month, the ADP report would signal payroll growth of about 80,000 in February. Economists are currently projecting job growth of about 100,000 for Friday's report.

Jane Fox : 3/7/2007 9:03:22 AM

Dateline WSJ - WASHINGTON -- Americans have become more pessimistic about the health of the economy, but investors remain confident about stocks despite recent market fluctuations.

A new Wall Street Journal/NBC News poll of American adults shows a significant decline in economic confidence since the year began. About 31% of Americans now expect the economy to get worse over the next year, double the proportion who said so in January.

Yet a smaller group of Americans with some stock-market investments remains bullish. Among those who say they have at least $5,000 in the market, 46% expect the market to move higher over the next year, while just 16% expect the market to fall. One-third expect the market to stay the same.

Investors "don't appear to be particularly shaken," says Democratic pollster Peter Hart, who conducted the Journal/NBC survey with Republican counterpart Neil Newhouse. But lagging spirits about the economy overall, Mr. Hart added, show the broader public mood is "anything but great."

Market Monitor Archives