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Keene Little : 3/13/2007 11:27:37 PM

OEX has been hitting its Fib retracements to the penny practically. As I had pointed out numerous times when it was topping, it kept banging its head on the 62% retracement of the 2000-2002 decline at 671. When it finally tipped over it retraced 38% of the July-February rally at 629.98 (the low on March 5th was 630.38) and then bounced into Monday's high which was a 38% retracement of the decline from February. This daily chart shows the longer term Fib retracements of the 2000-2002 decline and for the rally from July: Link

I also show two potential price paths and the dark red one is obviously more immediately bearish than the light red one. The dark red path calls for a correction to today's decline before it tips back over and heads down fast. The light red wave count calls for another rally leg up to finish a larger 2nd wave correction, similar to what I showed for the NDX. Link

The interesting thing to notice on the 60-min chart is how once again the bounce off the March 5th low nailed the 38% retracement on Friday and again on Monday before tipping over into today's decline. This index will definitely be worth watching to see what it does around its Fib retracements.

If the dark red wave count plays out, first watch for a 38% retracement of today's decline (636.50) for resistance, followed by 50% (638.21) and then 62% (639.93). Those numbers would obviously change if it drops a little lower tomorrow before starting a bounce. Any higher than 640 and I would say we're on the light red path to a new high before the wave-2 correction is complete.

Jeff Bailey : 3/13/2007 11:09:06 PM

CBOT has YG settling 649.50 too

Marc Eckelberry : 3/13/2007 11:08:39 PM

I might be too cautious, but better safe than sorry.

Marc Eckelberry : 3/13/2007 11:07:57 PM

Alert: Go long YG at 639, stop 637.50.

Marc Eckelberry : 3/13/2007 11:07:29 PM

Alert: exit YG long now +.30.

Keene Little : 3/13/2007 10:30:20 PM

This NDX 120-min chart shows an interesting setup for tomorrow. The uptrend line from July through last Monday's low (March 5th) is where price found support today. That's hardly a tested trend line but if it holds tomorrow then it will take on greater significance. If price immediately drops lower tomorrow morning then we'll find out if last Monday's low will hold (1710.97). Link

If price consolidates in a shallow choppy price pattern from either today's low (on top of the trend line) or from a test of the March 5th low, then it will look like the bearish wave count will be the correct one. We could see price consolidate relatively close to current levels through the rest of opex. On the other hand, if price breaks below 1710 and keeps truckin' southbound then it could get very ugly very fast.

But the bullish wave count calls for another leg up in its correction from the March 5 low. Two equal legs up in the larger a-b-c pattern would be at 1772. Interestingly that's right on top of the 43% retracement (most common for a 2nd wave correction) of the big decline from the February high. So far with just a 3-wave pullback from the March 9th high (last Friday), the bullish wave count has some merit. It'll all be in tomorrow's bounce as far as providing some clues as to what's next.

Jeff Bailey : 3/13/2007 10:29:27 PM

That was a "piker" ...

See 7 million and 6 million blocks at $138.25. (05:49:24 AM EDT)

Jeff Bailey : 3/13/2007 10:28:24 PM

See 2 agency crosses in the SPY of 2.2 million shares each at $138.24 (06:25 PM EDT)

Jeff Bailey : 3/13/2007 10:22:06 PM

Hang Seng Index ($HSI) Link ... -472 points, or -2.44% at 18,861.

Session low/high has been 18,765/18,860

Keene Little : 3/13/2007 10:03:15 PM

Considering the fact that the Nikkei 225 is down more than 500 points as of this hour (-3%) our futures aren't down much. It's actually the Nikkei reacting to our bad day and they're joining in. It'll be interesting to see if we get a bounce tomorrow or start breaking some serious support levels.

Keene Little : 3/13/2007 10:01:28 PM

Wednesday's pivot tables: Link and Link

OI Technical Staff : 3/13/2007 9:59:59 PM

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

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Marc Eckelberry : 3/13/2007 9:56:59 PM

That gap close is at 638.90, let's leave it some room.

Marc Eckelberry : 3/13/2007 9:56:37 PM

Alert: YG long 641.50, raise stop to 638.50.

Marc Eckelberry : 3/13/2007 9:54:51 PM

Let's raise the stop since we got an immediate pop on the entry.

Marc Eckelberry : 3/13/2007 9:47:04 PM

Like any trade today, it is risky so use only risk capital. But oil should start holding up and the dollar is very weak. Furthermore, we are approaching trendline support.

Marc Eckelberry : 3/13/2007 9:45:21 PM

The stop can be tightened to 640 if you wish, as there is risk to 638 is 641 breaks. But 641.20 is 61.8% 2007.

Marc Eckelberry : 3/13/2007 9:42:46 PM

Alert: YG long triggered at 641.50, stop 637.50.

Jeff Bailey : 3/13/2007 9:26:51 PM

Nikkei-225 ($NIKK) Link ... -512 points, or -2.98% at 16,667.

Session high/low has been 16,936/16,666

Jeff Bailey : 3/13/2007 7:44:59 PM

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

Note: I've "split" the underlying TLT full position into 14 and 100 share.

Keene Little : 3/13/2007 5:59:54 PM

Hi Keene, I'm especially feeling good this afternoon after taking your advice on exiting my April put spreads. I spent the whole bounce buying them back a little cheaper each day until Thursday when I finally was completely out. I'm estimating that move saved me $40K easily, maybe more depending on how low we go, vol, etc. I left all of the bear call spreads on which are well above this year's highs however.

I've got one question for ya though. I held my March SPX 1330/1315 bull put spreads and my RUT 700/690 bull put spreads on figuring we'd hit expiration before the [defecation hit the rotary oscillator]. With 2 days left and Friday's settlement, I'm considering bailing on those as well. In my shoes, what would you do? Thanks again for keeping me out of trouble. That definitely makes my OI membership worth every penny. Sincerely, Dan

Well all right Dan, way to go! Nice move. Of course if we rally back up to the 795 area you'll kick yourself for not waiting to buy them back even cheaper. But considering the risk to the downside I think that was a wise decision for account/trade management. I'll send my private email address where you can pay me my bonus (wink).

As for your other bull put spreads, let's just say I'd be surprised if the RUT and SPX got down to 700 and 1330, resp., this week. But as I've been saying, surprises will be to the downside now. The SPX 1330 level is in more danger than RUT 700 in my opinion. Assuming we're going to find a bottom soon, if not tomorrow morning, we should get a bounce that retraces some Fib portion of today's decline. If it then drops to a new low before Thursday morning I'd be worried about that 1330 level potentially getting violated in a fit of opex-related selling.

Marc Eckelberry : 3/13/2007 5:42:18 PM

Qcharts has YG settling at 649.50, I'm waiting to see IB confirm that on re-open.

Keene Little : 3/13/2007 5:39:22 PM

Keene, Appreciate your hard work - follow you closely. Are they really going to let 190,000 SPX 1400 Puts and 170,000 SPX 1420 Puts go out in the money??? Thanks, Bill

Normally I would say no, and that's the risk for the bears right here. If today's decline was just an exaggerated move within a larger upward correction then stand by for a big rally into the end of the week. Everyone and their brother would be yelling from the roof tops what a wonderful buying opportunity today was since it was a successful test of last Monday's low.

In a way I'd love to see that happen as I think it would be a fantastic long term short play setup. Plus I'm annoyed that I missed getting short near yesterday's high. I want a do-over. But back to your question--the competing interests in put options are all the naked puts that so many hedge funds have been living on for the past many months if not years. Like clockwork they sell a bunch of puts, let them expire, pocket the money, rinse and repeat. At a conservative 5% return per month (60% per annum), that's a very nice way to pull in regular income and get an enviable return on your money.

So now all of a sudden many of these put sellers are under water as we head into expiration. They can either buy the puts back or short the underlying stock/index to hedge their position. Both add selling pressure to the market (buying a put means the market maker sells the put and he shorts the stock/index to keep himself hedged). This action simply accelerates the selling just as we had seen last May. The same thing could be setting up for this opex week.

Keene Little : 3/13/2007 5:29:24 PM

I almost pulled the trigger yesterday on the April 750 puts at 8.00, when the Russell 2000 hit 790 (today they closed at 14.20, I'm beside myself) but I'm trying to be somewhat disciplined. Should I try to pick the top of this next wave up, somewhere between 780 and 790, to buy these puts, or should I wait until it breaks down again? My gut says try to pick the top, because if you are truly correct, another 5 upside points in the RUT won't really hurt me.

I feel your pain Anthony. I was waiting for the RUT to close its gap at 790.60 (yesterday's high was 789.88) as it looked like it needed a small consolidation yesterday and another minor new high this morning to complete a move that I wanted to try shorting. This morning's gap down took away that chance (why do I get the sense we're going to have a lot of these morning gap moves that foil traders' attempts to trade?). So now I'm looking for the next opportunity to sell it.

I like to pick turns and so finding the top of the next bounce is my preference. It should pull the VIX down a little and make puts a little cheaper with a higher price and lower VIX. Others like to stop themselves in on a break down and that would be a bounce followed by a new low and then you'd get short on the break lower.

As for bounce potential, assuming we're close to getting one, I'd like to see the RUT get back up near 780, the level of previous support the past few days and close to a 62% retracement of today's decline. But a 43% retracement of today's decline (which is the retracement level hit almost to the penny at the 789.88 high on Monday) is at 777.40 so let's see if the RUT can manage to tag that level and roll back over.

Buying puts on the bounce also gets you closer to the level where I would stop out of bearish plays--about 784. Any higher than that and we'd probably see the RUT press up to the 795 area to complete a larger wave-2 pattern.

Jeff Bailey : 3/13/2007 5:21:43 PM

Closing Internals found at this Link

Jeff Bailey : 3/13/2007 5:08:52 PM

April Crude Oil (cl07j) settled down $0.98, or -1.66% at $57.93.

Jeff Bailey : 3/13/2007 5:02:04 PM

Closing U.S. Market Watch found at this Link

Keene Little : 3/13/2007 4:53:57 PM

CME still leaves a lot to be desired as far as pointing to a direction. It's a messy chart with multiple scenarios. Today it pulled back to the uptrend line from August 2006 which price has been oscillating about since the end of February. Link

A bounce from here could take it to a new high and then depending on how high it got we'd have either the completion of its long term rally near 575 (light red count which needs to top out below 588) or at new all-time highs (614 would be two equal legs up).

A continuation lower, as per the dark red price depiction, could see it work its way down to its uptrend line from April 2005, bounce and then break down further. Key levels are 589 to the upside and 510 to the downside, a pretty wide spread and not very helpful.

Keene Little : 3/13/2007 4:47:17 PM

This decline should strike some fear into the hearts of bulls. But watch, they'll be tripping over themselves tomorrow on TV saying how we're successfully testing the lows, the market needed to prove it will hold, etc., and that this is a wonderful buying opportunity. Which is why the next bounce will be a great shorting opportunity since a new low after that will be the uh-oh moment.

But until we get the bounce and then new low, there's still the possibility for another push higher into the end of the week. We just need to stay aware of that, even if it feels like a remote possibility at this point.

Jeff Bailey : 3/13/2007 4:34:00 PM

EUR/JPY 153.90 -1.24% ... low/high so far 153.384/155.261

Jane Fox : 3/13/2007 4:32:45 PM

I will not be in the monitor tomorrow.

Jeff Bailey : 3/13/2007 4:32:51 PM

USD/JPY 116.26 -1.24% ... low/high so far 116.26/117.765

Jeff Bailey : 3/13/2007 4:25:48 PM

Swing trade sell COVERED Put alert ... place an order to sell one (1) of the SPY March $136 Puts (SFB-OF) for a LIMIT price of $1.10 or better. This order is GTC.

Jeff Bailey : 3/13/2007 4:20:32 PM

SPY goes out $138.25 -2.74% ... Most active option traded on CBOE for SPY was Mar. $140 Put (SFB-OJ) with Up/DnTick even at 1,429/1,446.

Last was $2.40. AvgHLC was $1.89.

Keene Little : 3/13/2007 4:04:39 PM

Whoever shorted the RUT's gap close yesterday and stayed short--great trade! Same as the others now--the next bounce will be another opportunity to get short for an even bigger ride down (bearish dark red wave count). The risk will be a continuation higher to a new high in order to finish a larger 2nd wave correction (as per the green bullish wave count). Link

Jeff Bailey : 3/13/2007 3:58:04 PM

Oh my! Yesterday's NYSE Composite ($NYA.X) close was right at its 19.1% retracement.

Marc Eckelberry : 3/13/2007 3:55:53 PM

Companies who profit from war and oil have no country. That's an illusion. We have a war on average every 15 to 20 years, just like clockwork. It's like a chart, you don't need to read the news, it's irrelevant.
I thought I would feed you enough cynicism today to become a good trader...

Jeff Bailey : 3/13/2007 3:56:44 PM

Dreyfus High Yield (DHF) $4.28 -0.92% ... well off its recent $4.17 relative lows. SEC Yield currently 7.99%.

Keene Little : 3/13/2007 3:55:29 PM

We're getting the flush into the close as I thought we might. Those who haven't hedged their long positions (such as naked puts) need to get it done before the close so that tends to increase the selling pressure. Assuming we'll get a bounce tomorrow (maybe yes, maybe no) the updated NDX chart shows the same two possibilities as shown for the DOW and SPX. Link

A bounce followed by a move to new lows would confirm the bearish wave count. Until that happens we could see another push higher as part of a larger wave-2 upward correction.

Tab Gilles : 3/13/2007 3:53:23 PM

$SPXwith YEN Link $RUT Link

Jeff Bailey : 3/13/2007 3:52:56 PM

Russell 2000 Index (RUT.X) alert! 769.01 -2.53% ... back to test its 38.2% retracement.

Jane Fox : 3/13/2007 3:49:20 PM

NEW YORK (MarketWatch) - What's good for Halliburton shareholders, may not be good for the U.S. economy and the dollar.

On Sunday, Halliburton Co. (HAL) , currently the largest military contractor in Iraq, said it will move its corporate headquarters from Houston to Dubai. The shift is part of a strategic plan to focus on expanding relations with state-owned oil companies, the company said.

The Dubai announcement, which comes at a time when Halliburton is under investigation by government agencies over allegations of improper business dealings, has drawn criticism from politicians including Senator Hillary Clinton. Critics are questioning whether the move is really an effort to avoid taxes and recent legal inquiries.

Jeff Bailey : 3/13/2007 3:47:43 PM

Program Trading Curbs have been in since 03:00 PM EST.

NYSE Composite (NYA.X) 8,940.64 -1.97% ... down 180 here.

Jeff Bailey : 3/13/2007 3:46:31 PM

SPY $138.50 -1.76% ... juuuust undercut its WEEKLY S1 by 4 cents.

Jeff Bailey : 3/13/2007 3:45:49 PM

VIX.X 18.22 +30.23% ... yet to see WEEKLY R1.

Jeff Bailey : 3/13/2007 3:44:30 PM

EWJ $14.50 -2.09% .... offers build at WEEKLY Pivot ($14.51).

Marc Eckelberry : 3/13/2007 3:38:01 PM

Now it's over. Volume on the last rally tells us these guys were nowhere to be seen, just suckers and scalpers. Of course, throw in a few upgrades so that you can sell whatever inventory is left.

Keene Little : 3/13/2007 3:37:39 PM

The DOW has a similar setup to the SPX chart I showed--today's move down looks like the start to wave-3 and it would be just the 1st wave of 3. In that bearish wave count (dark red) we'll be due a 2nd wave bounce--wave-(ii) on the chart--to be followed by the 3rd wave of wave-3 down. We'll want to short for that ride. Link (previous chart: Link )

Proof of the bearish count would come with a bounce followed by a move to new lows. Until that happens it's still possible that today's decline is finishing up wave-b (green) which calls for wave-c up to finish wave-2. While that's looking less likely at this point, any rally back above 12280 would suggest that's what's happening. In the meantime we'll be looking at the next bounce very carefully for a short entry.

Marc Eckelberry : 3/13/2007 3:36:18 PM

Goldman record earnings and you know they were scamming everyone for all the bucks they could before the bear market comes back and you are left holding the inventory they dumped every day at the open for the past 3 months, while telling you to buy the markets. The distribution was slick and apparent for all day traders who hit the open. Not too heavy, just enough to slowly get out. It took months, and I know because I traded opening shorts during that time, You just had to get out quickly before the hedgies came in to buy.

Marc Eckelberry : 3/13/2007 3:32:16 PM

NQ loses weekly pivot at 1754.25 once again. Don;t even think of bottom fishing there. I think we will see 1625 with NDX within a week.

Marc Eckelberry : 3/13/2007 3:31:27 PM

I have a feeling we got swiped by a scumbag trader. YG's lower low was with a bull divergence and I am back in, but I will leave that risk up to you. The signal remains at 641.50, but we might never get it if oil holds 58.

Jeff Bailey : 3/13/2007 3:23:51 PM

US FDA Clears Glaxo's Pill For Breast Cancer

Reuters Story Link

Jeff Bailey : 3/13/2007 3:22:05 PM

GlaxoSmithKline (GSK) $56.22 +0.28% .... jumping on volume.

Keene Little : 3/13/2007 3:16:34 PM

I see the 100 day moving average converged with the 72 day (exp.) and the 20 day (exp.) moving average on the SPX at about 1410-1412 yesterday and today. Maybe this was our signal that 1410 was going to be too much resistance to get through and the fibonacci timeframe was more important than price highs? The 1410 area was also about 38% retracement of the 2/22 high to the 3/5 low, in a weak market 38% retracements are sometimes all you get. Could this mean we are in wave one of the oh #$*&% wave 3?

Scott, I'm thinking you may be exactly right. The bounce that corrects this decline, the 2nd wave of wave-3, could set up the 3rd of a 3rd wave down. It's certainly a bounce we're going to want to test on the short side.

Jeff Bailey : 3/13/2007 3:15:17 PM

03:00 Internals found at this Link

Marc Eckelberry : 3/13/2007 2:10:10 PM

Go long at 641.50, stop 637.50.
Below that, forget it.

Marc Eckelberry : 3/13/2007 2:09:16 PM

Stopped out YG -2

Keene Little : 3/13/2007 2:08:37 PM

This move to new lows now is looking like it could be the 5th wave of the move down from yesterday afternoon (it may consolidate a bit before giving us the new lows). If wave-5 is to equal wave-1 then that projects down to DOW 12035 and SPX 1374.89. We could get a flush into the close. Expect a test of last Monday's lows to be heralded as a successful test of the lows and that it's time to buy. That could be (and will very likely give us a good bounce) but it's starting to look ugly to me.

Jane Fox : 3/13/2007 2:05:22 PM

TICKS have been all over the map today. Usually they are mostly above or below 0 but today there have been as many +1000 readings as -1000.

Jane Fox : 3/13/2007 2:03:45 PM

TICKS -1000.

Jeff Bailey : 3/13/2007 2:02:48 PM

03:00 Market Watch found at this Link

Marc Eckelberry : 3/13/2007 2:02:29 PM

Alert: YG long 646, raise stop to 644.

Marc Eckelberry : 3/13/2007 2:00:30 PM

S1 is 645.90, gap open March 6 is 644.90, you can tighten the stop if you wish.

Marc Eckelberry : 3/13/2007 1:57:31 PM

This is for risk traders only, please.

Marc Eckelberry : 3/13/2007 2:01:16 PM

If stopped, next entry is 639/641, where we have a gap close and trendline support. May oil is finding support at 60, that is your typical rotation move, pushing April down enough (58).

Marc Eckelberry : 3/13/2007 1:55:23 PM

Alert: Long YG (April) 646, stop 643.

Jeff Bailey : 3/13/2007 1:50:40 PM

US 9-year 11-Month Notes: 4.523%; 79.95% At High

DJ- The U.S. Treasury awarded $8.00 billion in nine-year 11-month notes at Tuesday's auction at a high rate of 4.523%.

The Treasury received bids totaling $21.13 billion for the reopened 10-year notes and accepted $8.00 billion, including $12.11 million of noncompetitive tenders, down from $57.15 million at the previous 10-year note auction on Feb. 7, 2007.

The Treasury also sold $100.00 million of notes to foreign and international monetary authority accounts on a noncompetitive bidding basis.

The bid-to-cover ratio, an indication of demand, was 2.64, Treasury said.

Tenders submitted at the high yield were allotted 79.95%.

The median rate was 4.498%; that is, 50% of the amount of accepted competitive bids were tendered at or below that rate.

The dollar price was 100.801596 and the coupon rate was set at 4 5/8%, or 4.625%.

Accepted indirect bids for the reopened 10-year notes were 15.4% of the total, below 30.0% in February.

Of the competitive bids accepted, 5% were tendered at or below the rate of 4.460%.

The high rate was down from 4.740% at the previous 10-year note auction. The high rate was the lowest since 4.490% at the 10-year note auction on Dec. 8, 2005.

The issue is dated March 15 and matures on Feb. 15, 2017.

The CUSIP number on the reopened 10-year notes is 912828GH7.

Keene Little : 3/13/2007 1:45:23 PM

SPX dropped marginally below 1381 which is the key level I've had on the chart to show where a decline would prove that more bearish things are coming and that is shown by the bearish wave count (dark red) on this SPX 60-min chart. It's possible, but really only if it starts rallying now, that today's "pullback" is completing wave-b of the a-b-c green wave count for wave-2. The bullish wave count would mean we'll get a strong rally into the end of the week. Things changed quickly from this: Link to this: Link

The upside target for the short term bullish wave count, for two equal legs up, is at 1416.83 which is very close to the 50% retracement of the big decline so if we get a rally going that's where I see it headed. We may not be done putting in a bottom for today's decline but once it does finish and we get a larger bounce, that bounce is the one that will tell us what's next. If it turns into a 3-wave bounce that then drops to a new low, short it and hang on.

Tab Gilles : 3/13/2007 1:41:01 PM


Is this the long awaited second-leg down?

Still looking at a 10% correction, NDX 1650. Link

Staying with Profund UltraShort OTC (USPIX) and Profunds UltraShort SmallCap (UCPIX).

***SEE post 1/8/07 11:43AM***

Link Link

GOOGLE (GOOG) Back on 2/12/07 11:06AM I posted that if the $452 support on GOOG didn't hold up that the $430 level would be tested. Which coincides with the 200-day ma and the 3 yesr weekly uptrend. Link Link

Jeff Bailey : 3/13/2007 1:20:36 PM

Good Gravy! ... 5-year Yield down 9.1 bp at 4.410% ...

Jeff Bailey : 3/13/2007 1:19:25 PM

SPY Option Chain as SPY traded $138.74 ... Link ...

Keene Little : 3/13/2007 1:16:11 PM

Now it's turning ugly for the bulls. This is going beyond what I would have expected for a "normal" pullback and says the wave-2 bounce may have topped afterall. The only thing I have to keep reminding myself about is that moves will tend to be exaggerated during opex.

Jeff Bailey : 3/13/2007 1:10:58 PM

VIX.X 17.32

Jeff Bailey : 3/13/2007 1:10:38 PM

About to see if $138.74 is as influencial as $141.40.

Keene Little : 3/13/2007 1:09:01 PM

Two equal legs down in a potential a-b-c move from the high last Friday for NDX is at 1731.88 which is where NDX could be hammering out a bottom here. It would be a perfect place to launch a rally now and catch many of the bears with their shorts down. But it needs to turn around pretty quick here otherwise it'll be the bulls who get caught long again.

Jane Fox : 3/13/2007 1:06:11 PM

TRIN +1.70 and TICKS -1000.

Jeff Bailey : 3/13/2007 1:01:39 PM

Target on the EWJ-PO is $13.50 in the underlying.

Jeff Bailey : 3/13/2007 12:59:22 PM

Swing trade put alert ... for four (4) of the iShares Japan EWJ April $15 puts (EWJ-PO) at the offer of $0.60.

EWJ $14.60 -1.41% ...

Keene Little : 3/13/2007 12:56:27 PM

In addition to the MACD signal, the descending wedge look to the decline is potentially bullish from here. Link

Jane Fox : 3/13/2007 12:51:01 PM

MACD is saying we may be finding a bottom here. Link

Keene Little : 3/13/2007 12:48:15 PM

Both the DOW and SPX have now retraced 62% of the bounce from last Monday's low, when measured from the early morning high on last Friday (12154 and 1387.79, resp.) so it makes for a good place for support. If the decline continues then support could be another 5 points lower for SPX (1382) and 50 points for the DOW (12100).

Jeff Bailey : 3/13/2007 12:35:46 PM

Simply not many bids that I've been able to find since BIX.X hit WEEKLY S1.

BIX 383.57 -2.09% ...

Keene Little : 3/13/2007 12:34:42 PM

Downside potential for SPX is 1386-1388 without necessarily meaning anything more bearish is starting. A move below 1386 would begin to look a lot more bearish.

Jeff Bailey : 3/13/2007 12:30:56 PM

That little dart back lower in the VIX.X to weekly pivot may have been Mar $138 Put (SFB-OH) selling. Has moved up to #2 CBOE most active SPY option.

Keene Little : 3/13/2007 12:29:53 PM

Ideally we'll see this small consolidation followed by another move lower. That should finish the move down from yesterday afternoon and set up a bounce. That bounce will then tell us what's next. If it bounces to only a Fib retracement of the decline and then heads to new lows then there will be no question in my mind that we'll want to get short and hang on. But there is the possibility for today's pullback to set up the next rally leg for which I'll provide some upside targets once it looks like we've bottomed.

Jeff Bailey : 3/13/2007 12:21:58 PM

YM 12,293 .... coiling at DAILY S2

Jeff Bailey : 3/13/2007 12:16:39 PM

01:00 Internals found at this Link

Jane Fox : 3/13/2007 12:14:48 PM

These are certainly bearish. Link

Jane Fox : 3/13/2007 12:11:11 PM

Even though the markets made higher highs earlier I was not fooled into going long. The AD line at -1988 was too much evidence for me.

Jeff Bailey : 3/13/2007 12:02:31 PM

01:00 Market Watch found at this Link

Jeff Bailey : 3/13/2007 11:53:52 AM

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

Jeff Bailey : 3/13/2007 11:48:15 AM

EUR/JPY 154.313 -0.62% ...

Jeff Bailey : 3/13/2007 11:45:47 AM

USD/JPY 116.80 -0.78% ...

Jeff Bailey : 3/13/2007 11:38:41 AM

SPY March $140 Calls (SFB-CJ) now #2, last $0.50. Up/DnTickVol 133:462.

$140 + $0.50 = $140.50.

Still a line in the sand for resistance into Friday's expiration.

Jeff Bailey : 3/13/2007 11:36:48 AM

SPY Option Chain (sorted CBOE Most Active at this Link ... #3 most active is Mar $137 Put (SFB-OG) with notable selling bias. "Just" 2,253 traded on CBOE. I'm showing 2,980 all market makers with low/high of $0.15/$0.30.

Keene Little : 3/13/2007 11:32:43 AM

Two things have me questioning today's decline and they have to do with the "personalities" of waves. A 2nd wave correction is typically what I call a sucker wave. It convinces most that it's the start of the next move in the previous trend (up in this case). It's why it typically is marked with a sentiment reading greater than the previous move. I didn't see those things in this bounce and the amount of put buying made me think we haven't seen the high for the bounce yet.

The other thing has to do with b-waves. They're also sucker waves. In the wave-2 bounce, which is typically an a-b-c move, the b-wave pullback often pulls in the bears who think the corrective bounce is finished. The wave-c up gets started and hammers all the too-eager bears. It's why wave-c is typically very sharp. I didn't see that this time either. And that makes me think today's pullback is finishing up wave-b rather than the start of something more bearish.

These are more gut feelings about this move and not necessarily something concrete I can put my finger on, so take it with a grain of salt. My only caution is don't hang onto a short thinking it's heading for crash lows (although that's certainly a possibility). Be willing to take some money off the table.

Jeff Bailey : 3/13/2007 11:31:56 AM

All equity-based sectors in US Market Watch now red.

Keene Little : 3/13/2007 11:25:05 AM

It's turning into an ugly day for the bulls. I wish the upside pattern had been cleaner as far as identifying a top to the wave-2 bounce. Without that I'm left wondering if this sharp pullback is really the start of something more bearish or just finishing up a correction before another rally leg for wave-2 gets started.

The DOW is now working its way down towards 12184 which is the level I identified this morning as a potential downside target for the completion of a sideways b-wave correction from Friday's high (to then set up the next rally leg). Keep an eye on that level for support just in case.

Jeff Bailey : 3/13/2007 11:25:01 AM

SPY most active option at CBOE is May $140 Put (6,279:17424) ... Up/DnTickVol about even at 3,035/2,747

Jeff Bailey : 3/13/2007 11:22:41 AM

VIX.X alert! 16.32 +16.51% ... jumps above WEEKLY Pivot.

Jeff Bailey : 3/13/2007 11:21:56 AM

SPY alert! $139.74 -0.88% ... gets the trade at Weekly Pivot ($139.84).

Jeff Bailey : 3/13/2007 11:10:27 AM

VIX.X 15.09 +7.86% ...

Jeff Bailey : 3/13/2007 11:10:12 AM

SPY $140.34 -0.46% ... vulnerable to WEEKLY Pivot.

Jeff Bailey : 3/13/2007 11:09:51 AM

BIX.X alert! 387.11 -1.18% ....

Jeff Bailey : 3/13/2007 11:08:51 AM

BIX.X 387.24 -1.15% ... sets up for test of morning low. WEEKLY S1 at 387.16.

Jeff Bailey : 3/13/2007 11:04:08 AM

Mortgage Banker's Assoc.: Mtg. Delinquencies At 4.95% In Q4 2006

DJ- Delinquency rates for subprime adjustable rate mortgages reached 14.44% in the fourth quarter of last year, jumping 122 basis points in three months, the Mortgage Bankers Association said Tuesday.

It also reported that overall, delinquencies on one-to-four family homes jumped 28-basis points in the fourth quarter to 4.95%, according to the trade group's quarterly National Delinquency Survey.

"Subprime borrowers are more likely to be susceptible to the cumulative increases in interest rates that we have experienced and the resultant nationwide slowing of home price appreciation including outright declines in some markets," MBA chief economist Doug Duncan said.

MBA reported that 4.53% of the 5.97 million subprime loans in its survey were in foreclosure at the end of the fourth quarter, up from 3.86% that were in foreclosure at of the end of the third quarter.

Foreclosure inventory rates were much lower for prime loans. Just 0.50% of the 33.32 million prime loans in its survey were in foreclosure, up from 0.44% at the end of the third quarter.

Duncan said he expected delinquency foreclosure rates to level off towards the end of this year "as the housing market regains its footing."

The states with the highest overall delinquency rates were Mississippi at 10.64%, Louisiana with 9.10%, and Michigan with 7.87%.

Keene Little : 3/13/2007 10:52:28 AM

If we see a break below the recent lows of the the past few days, be careful of a head fake break that then gets reversed back up.

Jeff Bailey : 3/13/2007 10:48:21 AM

Chevron (CVX) $69.48 +0.94% ...

Jeff Bailey : 3/13/2007 10:47:48 AM

Chevron: Sees Improving Refinery Utilization By 6%

Jeff Bailey : 3/13/2007 10:46:56 AM

Chevron: Extends Downtime At San Francisco Refinery

Jeff Bailey : 3/13/2007 10:46:21 AM

Chevron: Venezuela Talks Now Will Influence Long-Term Presence

Jeff Bailey : 3/13/2007 10:27:44 AM

IEA: OPEC-10 Feb Output Down 365,000 B/D On Month to 26.8M B/D

DJ- The International Energy Agency warned Tuesday that global oil and fuel inventories were being sucked lower at an unusually high pace this year, leading it to fret about demand being met in the coming months and amplifying the need for more crude from the Organization of Petroleum Exporting Countries.

The agency's widely-anticipated monthly assessment of the global oil balance said that stockpiles of crudes and fuels held by the Organization for Economic Cooperation and Development group of industrialized nations were falling at a pace of 1.26 million barrels a day so far this year and could spell the largest stock draw in a January-to-March period in more than 10 years.

The IEA, which represents the energy security interests of the OECD, also red-flagged an unusual draw down in crude stocks.

The stock draws are happening because of unplanned refinery outages, high crude demand in Europe and high U.S. fuel consumption.

Jeff Bailey : 3/13/2007 10:24:02 AM

DJ- New Century Shares At $1.63, Trading On Pink Sheets

Keene Little : 3/13/2007 10:20:05 AM

The bounce off this morning's low is hardly bull inspiring. It looks more like a correction to this morning's drop which suggests lower lows ahead. But this is the week of "unnatural" moves in the market so we need to exercise a little more caution than usual.

Jeff Bailey : 3/13/2007 10:16:00 AM

11:00 Internals found at this Link

Yesterday's Internals at this Link

Jeff Bailey : 3/13/2007 10:01:51 AM

11:00 Market Watch found at this Link

Keene Little : 3/13/2007 9:35:11 AM

It's tough to tell if we're consolidating now near the lows and getting ready for another push lower or if we're building a base to start a rally leg. If you're trading, keep scalping until a longer term trade setup appears.

Jeff Bailey : 3/13/2007 9:30:56 AM

VIX.X 14.66 +4.78% ...

Jeff Bailey : 3/13/2007 9:30:06 AM

Swing trade NAKED put filled alert on the VLO-PY at the bid of $0.80.

VLO $61.22 +1.54%

Jane Fox : 3/13/2007 9:19:18 AM

ER now making new daily highs. Like I said before the best trade so far today is no trade.

Jane Fox : 3/13/2007 9:15:09 AM

Well look at that, the bulls are putting up a fight and are not letting the bears take control.

Jeff Bailey : 3/13/2007 9:14:28 AM

VIX.X 15.13 +8.14% ...

Jeff Bailey : 3/13/2007 9:14:09 AM

Swing trade sell naked put(s) alert for two (2) of the Valero Energy VLO Apr $57.50 Puts (VLO-PY) for a limit price of $0.80.

VLO $61.14 +1.40% ...

VLO-PY $0.75 x $0.85

Jane Fox : 3/13/2007 9:10:27 AM

ER is also the only market trading under its PDL. Link

Jane Fox : 3/13/2007 9:09:02 AM

ER to new daily lows.

Jane Fox : 3/13/2007 9:08:37 AM

TICKS just made a -800, VIX to new daily highs and AD volume still making new daily lows. I think the bears have just made it clear as to who has the reins this morning.

Jeff Bailey : 3/13/2007 9:02:25 AM

10:00 Market Watch found at this Link

Keene Little : 3/13/2007 9:02:22 AM

NDX was the only one to close this morning's gap on that thrust higher. The others aren't even close yet. If the DOW and SPX drop back down and make a minor new low that will give us a 5-wave decline from yesterday afternoon. That would then be either the start of something bigger to the downside or the ending of b-wave correction to this rally and get ready for a strong rally leg back up. We wouldn't know which it would be until after the bounce gets started. In the meantime be careful of the whipsaws as this could go either way from here.

Jane Fox : 3/13/2007 9:01:27 AM

Although the large cap futures all made new daily highs they were not able to add to those gains, which is not surprising considering the AD line at -1641.

Jane Fox : 3/13/2007 8:58:55 AM

Here is your daily chart of Gold. It looks like it will attack that resistance zone again and may break through. Link

The $ on the other hand looks like its resistance has held up and will make a lower low. Link

Jeff Bailey : 3/13/2007 8:58:23 AM

Accrediteh Home Lending Seeks More Capital ... MarketWatch Story Link

Keene Little : 3/13/2007 8:55:30 AM

Rather than a deeper pullback today in a larger 3-wave pullback from last Friday (as I had just shown on the DOW 60-min chart below) it's also possible we're seeing the completion of more or less a sideways consolidation from last Thursday. It works out roughly the same as the a-b-c count for the DOW but without the deeper pullback before getting the c-wave up. This SPX 60-min chart shows that possibility (and assumes the end of the correction was this morning's low). Link

This is all speculation as I try to keep up with this morphing correction. The bottom line for me is that I do not see an ending pattern yet for the 2nd wave bounce and therefore can't recommend getting short yet for the big ride down in the 3rd wave. This simply needs to play out further until the pattern clears up a bit more.

Jeff Bailey : 3/13/2007 8:54:18 AM

Accredited Home Lenders (LEND) $5.83 -48.94% ...

Jane Fox : 3/13/2007 8:53:17 AM

Large cap futures are all making new daily highs even though the AD line is -1645 and AD volume is heading straight downward.

Jane Fox : 3/13/2007 8:49:49 AM

Although the TICKS have not made a -800 print they have spent most of their time under 0.

Jane Fox : 3/13/2007 8:49:08 AM

Once again it is not the time to be trading. AD line and volume very very bearish but VIX and TRIN are not.

Keene Little : 3/13/2007 8:42:52 AM

The move down this morning isn't nearly as bearish looking for NDX as it is for the DOW and SPX. Without breaking its slightly shallower up-channel it maintains the potential to continue higher after this pullback. Link

Jane Fox : 3/13/2007 8:38:51 AM

VIX open within its PDR and is falling. TRIN prints below its PDL. These two are not confirming the bearishness.

Jane Fox : 3/13/2007 8:35:32 AM

Wow AD line is -1435. I expected it to be under 0 but not this far under.

Jane Fox : 3/13/2007 8:32:39 AM

NEW YORK (MarketWatch) -- Gold futures edged higher Tuesday, as a decline in the dollar and a rise in crude-oil prices created demand for the precious metal.

Gold for April delivery rose $1.20 to $651.50 an ounce on the New York Mercantile Exchange.

In the short term, "direction is still unclear and gold may have to weather further weakness, particularly with sliding energy costs reducing inflationary concerns, before reaching a level at which investors and speculators are happy to re-establish positions in the market," said James Moore, an analyst at TheBullionDesk.com. On Monday, gold futures closed down $1.70 to close at $650.30 an ounce.

Sentiment remained cautious Tuesday, and many traders found "little reason to add substantial fresh long positions," said Jon Nadler, an analyst at Kitco Bullion Dealers.

Jane Fox : 3/13/2007 8:31:28 AM

NEW YORK (MarketWatch) -- NYSE Regulation Inc. said Tuesday it's suspending trade of New Century Financial Corp. (NEW) and its preferred securities because the issues "are no longer suitable for continued listing on the NYSE." The company expects its common stock to be quoted on the Pink Sheets following suspension. The move extends a trading halt put in place Monday and comes after a review of the company's business by the exchange. The suspention covers common stock as well as New Century's 9.125% Series A Cumulative Redeemable Preferred Stock and its 9.75% Series B Cumulative Redeemable Preferred Stock.

Jane Fox : 3/13/2007 8:30:40 AM

NEW YORK (MarketWatch) -- Goldman Sachs Group's first-quarter profit jumped 29% to record levels as trading for both clients and for the firm's own accounts continued to grow and as the Wall Street stalwart appeared to dodge fallout from recent subprime mortgage issues, financial results showed Tuesday.

Keene Little : 3/13/2007 8:19:06 AM

I'm surprised to see futures down as much as they are this morning. Without a cleaner looking ending pattern for the rally it's hard to trust that a high has been put in. But a break of uptrend lines from last Monday would tell us something more bearish is going on, at least for the short term.

But my first thought is that a sharp decline today could be finishing a sideways a-b-c type correction from last Friday's high (3-wave decline from that high, followed by a 3-wave bounce to yesterday's high and now it looks like a sharp decline to follow). That would suggest wave-b in the wave-2 bounce may not have completed yet. The 30-min DOW chart below (10:53 PM) showed the a-b-c move up for wave-2 but here's how it might look with a larger b-wave: Link

If this latter interpretation is correct it will suck in a lot of bears before spitting them out in the c-wave to follow. The downside Fib projection for this kind of move would be 12184 so it would be no small decline from the current level. But whether there will be follow through or a hard reversal is going to be a difficult challenge. We'll see how things settle out this morning since often times the premarket futures are a head fake move by the hedge funds.

Jane Fox : 3/13/2007 8:16:50 AM

ES and YM break their PDLs.

Jane Fox : 3/13/2007 8:00:40 AM

The $ broke its PDL overnight, which in turn gave Gold a little lift. Crude also is making higher highs and lows which should help Gold continue its "rally." I am still waiting to see if Gold can break its resistance zone on the daily chart before I take another GLD long. Link

Jane Fox : 3/13/2007 7:55:31 AM

Equity futures fell overnight helped by the lack luster retail sales data out at 8:30, however, they started their decline well before the data was released so it can't all be blamed on the retail data. Both ES and YM have tested their PDLs and I suspect the AD line will open below 0. Link

Jane Fox : 3/13/2007 7:50:32 AM

Dateline WSj - U.S. retail sales in February managed a slight gain that was below expectations and followed a flat reading the month before, indicating the economy's big driver, consumer spending, was weak in early 2007.

Retail sales increased 0.1% last month, the Commerce Department said Tuesday. Sales in January were unchanged, as reported originally.

The 0.1% increase in overall retail sales during February was a surprise on Wall Street. A Dow Jones Newswires survey of 21 economists had forecast an advance of 0.3%.

The retail-sales report illustrates where Americans are spending their money. Consumer spending makes up about 70% of gross domestic product, which is the scoreboard for the economy.

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