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OI Technical Staff : 3/16/2007 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The Market Monitor has been archived.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 : 3/16/2007 7:33:55 PM

I will update/recap my MM Profiles later.

Jeff Bailey : 3/16/2007 7:31:37 PM

Closing Internals found at this Link

Note: At today's close, NASDAQ's 5-day NH/NL ratio reversed back lower (32.00%). 38% needed for 3-box reversal back higher and 40% to generate a "buy signal."

Jeff Bailey : 3/16/2007 7:17:08 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 3/16/2007 7:07:24 PM

SPY March Most OI (March at top) with In/Out as well as 5-day and 20-day NET% Link

Jeff Bailey : 3/16/2007 6:45:34 PM

SPY Most Active Options sorted by CBOE volume at the close Link ... much different than when VIX.X "popped"

Jeff Bailey : 3/16/2007 6:04:30 PM

CAT $63.16 -0.47% .... $63.80 extended ...

Jeff Bailey : 3/16/2007 6:02:34 PM

Wait till those CAT-DN are offered $0.10

Jeff Bailey : 3/16/2007 6:01:47 PM

Shhhh Jimmy C ...

Jeff Bailey : 3/16/2007 5:58:59 PM

This is now ... WALLstreet Bullish % (BPWALL) Link

Months January - September are 1-9. October - December are A-C.

Jeff Bailey : 3/16/2007 5:45:49 PM

Good Gravy! ... SPY looks almost identical to XBD.X on technical basis.

Jerry (03/14/07 MM 02:06:14) Link are you following some of this as to May of last year?

Remember how the bullish % were saying 09/13/06 doesn't look like May 2006? But now they do?

Jeff Bailey : 3/16/2007 5:37:43 PM

I'm kind'a thinking the same thing Keene, especially if today's "knee jerk" reaction to the LEND news plays out a little more.

Perhaps the MARKET put this together at XBD.X 245, and sells the risk that the bigger brokers like GS, BSC, LEH and others are going to pick up some "bargain" subprime loans (like JPM picked up some Nat. Gas at $4.00 from Amaranth), then THEY manage the risk as only the good ones know how to do. NEW certainly didn't know how to do it. LEND at least realizes they didn't, but are trying to do something before it is too late.

Perhaps the XBD.X is 2/3 of the way through its correction (-14% about 2/3 of -21%).

Jeff Bailey : 3/16/2007 5:30:28 PM

AMEX Broker/Dealer Index (XBD.X) 227.14 -1.04% Link

After trading another all-time high in January, the XBD.X is down a healthy 14% at Wednesday's low, which just happens to be very, very close to that close from 09/13/06. A 21% decline, like that witnessed from April to June of last year, would take the XBD.X to 205.00.

Keene Little : 3/16/2007 5:11:04 PM

Jeff, I see a low on 9/19/06 where XBD stopped this week (220.75 on 9/19 and 220.67 this week). That's also where there were highs near this price on 6/2, 7/3, 8/4 and 8/17). Somebody likes the 220 level for this index. Currently it looks to be struggling to hold onto its uptrend line from May 2005 so this will be a great index to watch for some clues as to what's next, especially if it breaks below 220.

Jeff Bailey : 3/16/2007 4:59:35 PM

It's starting to look like late May of 2006!

Jeff Bailey : 3/16/2007 4:58:12 PM

Hey Keene! Have you noticed the XBD.X's low this week relative to 09/13/06 evening's close of 221.03?

Bullish % Wall Street (BPWALL) screen capture from 09/13/06 Link

Keene Little : 3/16/2007 4:39:58 PM

Closing out the week, there's no real change to the alligator chart (GOOG's daily) I showed yesterday. I have the key level for the bullish count at 463 but a heads up that something more bullish is happening is at 450 where the bounce on Thursday morning stopped--basically at the top of its gap. As long as that level continues to act as resistance we should see GOOG head down to the bottom of its channel and close its gap at 426 and perhaps find support at the Oct 17 low near 416. Link

Jeff Bailey : 3/16/2007 4:33:30 PM

EWJ $14.41 -0.06 ... that's just about right based on today's USD/JPY action.

Jeff Bailey : 3/16/2007 4:29:25 PM

SPY $138.44 -0.34% looks official. WEEKLY Pivot Levels for next week are ...

$134.25, $136.35, Piv= $138.84, $140.94, $143.43

Keene Little : 3/16/2007 4:28:11 PM

CME is in a do or die position in its wave count. It dropped below its uptrend line from April 2005, just as it did on April 27th. That was a panic sell kind of day so what's the excuse this time? But it did manage to rally back above after the 1-day break so we'll see if Monday it can do the same. Link

The drop from the March 8th high achieved a Fib projection target at 520.18 today (2nd leg down = 162% of the 1st) so it is conceivably set to rally next week. Keep an eye on this one as it's been a pretty good barometer for the broader market. If it continues to decline on Monday then that would be bearish for all around.

But if it rallies, especcially with a move back above its trend line near 530, then I suspect the broader market will also be rallying. And if it gets back above about 540 then I'd start to more seriously consider one of the two bullish wave counts I show in dark and light green.

Jeff Bailey : 3/16/2007 4:24:07 PM

USD/JPY 116.74

Jeff Bailey : 3/16/2007 4:21:48 PM

YM 12,213 ... maybe "smart money" looking long late at WEEKLY S1?

Jeff Bailey : 3/16/2007 4:17:05 PM

AMEX:IWN $78.95 (+8.09% for 52-weeks)

AMEX:IWO $78.11 (+1.29% for 52-weeks)

Jeff Bailey : 3/16/2007 4:14:34 PM

With AMEX:IWM $77.28

Jeff Bailey : 3/16/2007 4:13:56 PM

And the mighty smallcaps of the RUT.X 778.44

Jeff Bailey : 3/16/2007 4:13:24 PM

QQQQ $42.83

Jeff Bailey : 3/16/2007 4:13:01 PM

SPY $138.50

Jeff Bailey : 3/16/2007 4:12:49 PM

DIA $121.02

Jeff Bailey : 3/16/2007 4:12:36 PM

YM 12,209

Keene Little : 3/16/2007 4:14:01 PM

No sell off in the futures after the cash close which is what I was hoping we'd see (smart money getting ready for a gap down Monday). The set up is there for the gap down and hard sell off but it will have to happen. Otherwise any more bounce and it will negate the bearish setup.

So it'll be easy Monday--stay short unless this afternoon's highs gets taken out (NDX is the closest to doing that). In the event of a higher bounce we would either continue to consolidate or rally to new highs for this move. So the sidelines or long will be the place to be in that case.

Jeff Bailey : 3/16/2007 4:11:51 PM

Way too late for the day trader's light bulb to be going on, but I should have been looking short the YM this morning

Jeff Bailey : 3/16/2007 4:09:39 PM

Sheeeeooooot ... $138.25. (03/13/07 10:29:27 and 10:28:24 PM EDT)

Jeff Bailey : 3/16/2007 4:08:18 PM

What was the block outs on the SPY large blocks from the other night?

Jeff Bailey : 3/16/2007 4:06:15 PM

Pretty much WEEKLY S1s.

Jeff Bailey : 3/16/2007 4:05:50 PM

SPY ... "mid-point" of Wednesday's gyration low to Thursday's high $138.35.

Just putting that together.

Jeff Bailey : 3/16/2007 4:04:18 PM

SPY $138.47

Jeff Bailey : 3/16/2007 4:02:14 PM

DIA $121.01

Jeff Bailey : 3/16/2007 4:02:00 PM

YM long exit alert ... 12,207

Jeff Bailey : 3/16/2007 3:55:23 PM

YM Long finger on the button alert ... with YM 12,211

Keene Little : 3/16/2007 3:47:42 PM

Keene, can you recommend a good book on Elliott wave theory?

Michel, I think one of the best books to read, one which fully explains the wave theory without boring you to tears (but still makes for a great sleep aid) is 'Elliott Wave Principle" by Robert Prechter and Alfred Frost. With the aid of toothpicks you can easily finish it on a weekend.

I'm also putting together a tutorial of sorts and hope to soon be able to offer that to those who are interested.

Keene Little : 3/16/2007 3:41:46 PM

Looks like an effort to hold this up into the close but it's not exactly impulsive looking in the bounce. As long as price stays below this afternoon's bounce high there's a good chance for a continuation lower. Back above that high and all bearish bets are off the table.

Keene Little : 3/16/2007 3:36:05 PM

I just started up with the Market Monitor last week and I appreciate all of your input and hard work. My question is: with all the market manipulation from the market makers and institutional traders (I just watched the Jim Cramer interview about hedge fund manipulation), how can technical analysis be a viable system? I've always been a technical trader, but this has got me thinking.

First of all Somgya, welcome aboard the MM. Just remember, we look forward to your valuable input as well (wink). You raise a great question, one which I've given a lot of thought over the years (such as, is it different this time than it used to be without all the hedge funds, or electronic trading, or program trading, etc.). I guess the market is always different and yet always the same. It's still made up of human beings with all the same emotions (fear and greed) and herd mentality. The stock market has always been manipulated to lesser or greater degrees.

So while things may get skewed intraday, by the end of the day or week or month it all evens out. The charts still do a better job at telling us what's likely to happen next than anything else I know. We all have different tools we like best but in reality it comes down to proper risk management--win more than you lose, don't risk too much on each play, and by all means use and stick to your stops. Follow the charts and proper account management (and the MM of course--wink) and it's the best combination for a winning strategy.

Jeff Bailey : 3/16/2007 3:34:36 PM

YM 12,206

Jeff Bailey : 3/16/2007 3:34:29 PM

SPY $138.50

Jeff Bailey : 3/16/2007 3:34:21 PM

VIX.X 16.61 +1.09% ...

Jeff Bailey : 3/16/2007 3:30:48 PM

YM long raise stop alert ... to 12,194.

YM 12,213

Keene Little : 3/16/2007 3:24:56 PM

Do you think it's too risky to short the SPX 1380 call with a possible down turn or gap down at the open tomorrow or do you think we'll stay pinned to these prices?

Sorry Somgya, I'm not sure when you're referring to since 1380 is below the current price this Friday afternoon and you mentioned tomorrow. If you're thinking of shorting SPX over the weekend I consider that a risky play considering SPX is already above that level. It could work fabulously well but only if you're very right. That's a risky move. At least with futures I can get out Sunday night if I don't like what I'm seeing. You're at the mercy of the market makers Monday morning with an option play.

Jane Fox : 3/16/2007 3:24:06 PM

MACD has some very nice bullish divergences. Link

Jane Fox : 3/16/2007 3:20:54 PM

The VIX made an interesting jump earlier. Link

Jane Fox : 3/16/2007 3:20:17 PM

AD line is still a bearish -931 so I do not see a lot of room to the upside.

Jeff Bailey : 3/16/2007 3:14:57 PM

YM long entry alert

Jeff Bailey : 3/16/2007 3:13:56 PM

YM long setup alert with YM 12,197.

Go LONG a trade at 12,207 , stop 12,188 , target 12,230

Keene Little : 3/16/2007 3:13:54 PM

Same for the RUT (at least the RUT is more bullish looking as far as holding above its broken downtrend line, as is the NDX): Link

Keene Little : 3/16/2007 3:10:38 PM

Same setup for NDX: Link

Jeff Bailey : 3/16/2007 3:10:28 PM

That's got to be tied to the VIX.X action earlier.

Keene Little : 3/16/2007 3:07:59 PM

Same setup for SPX as I showed for the DOW: Link

Jeff Bailey : 3/16/2007 3:07:18 PM

Alert! Now seeing CBOE report (in my SPY Option Chain) a HUUUUGE jump in $138 Puts (SFB-OH) 24,975 contract.

Jane Fox : 3/16/2007 3:03:49 PM

TICKS -800

Keene Little : 3/16/2007 3:03:43 PM

Here's the update to the DOW 60-min chart showing the two wave count possibilities. A bounce from here that takes out this afternoon's high would have a good chance of being the start of the 3rd wave of wave-C in an A-B-C correction off the March 5th low. Otherwise we should be starting a strong 3rd of a 3rd wave down. This one has a chance of gapping lower and dropping hard on Monday. It's one of the reasons I want to be short over the weekend. Link

Jeff Bailey : 3/16/2007 3:02:10 PM

03:00 Market Watch found at this Link

Jane Fox : 3/16/2007 2:54:28 PM

VIX making new daily highs and AD volume new daily lows, the formula the bears are looking for.

Keene Little : 3/16/2007 2:52:15 PM

Another minor new low could do it for this leg down and then get a bounce to correct it. Just stay aware of the possibility that we're completing a 3-wave move down from this morning's high. In that case we would start another rally leg up to new highs above today's.

Jeff Bailey : 3/16/2007 2:45:04 PM

Moody's Places On Review For Possible Cut Five Certificates From A New Century Home Equity Loan Trust Transaction ... from 02:35:14 PM EDT.

Keene Little : 3/16/2007 2:43:12 PM

I'm long the June RUT 750P. What are your thought on selling the April 750 to reduce overall cost? Essentially converting to a diagonal.

I normally love this kind of calendar spread and do many of them to lower my cost basis on long options. Spreads are good for when you don't particularly want to time the market but want to use longer term support/resistance levels for your plays. In this particular case I personally would hold off on selling the April 750 put. If we get the kind of flush to the downside that I'm expecting next week, you'll get a whole lot more money for it if you at least wait a couple of days to see if that flush is coming.

After the next leg down, assuming it's coming, we should get another longer consolidation period similar to the one we've had since March 5th. That would be perfect for chewing up time premium on a sold put (and you might be able to sell it lower than 750 thus ensuring a profit on your June 750 if the RUT drops lower than that.

Jeff Bailey : 3/16/2007 2:39:11 PM

USD/JPY unmoved 116.79

Jeff Bailey : 3/16/2007 2:36:56 PM

I have to say ... based on recent week's/month's action (from 01/12/07 entry), if long the stock at $46.16, I'd be looking to sell the April $47.50 calls (WAG-DW) for $1.00. Work that cost basis down to $45.15.

Jeff Bailey : 3/16/2007 2:32:23 PM

WAG $46.65 +2.03% ... with some upward VIX.X

Jeff Bailey : 3/16/2007 2:32:03 PM

Bullish swing trade call sell remaining alert ... Let's sell the remaining one (1) Walgreen WAG April $45 Call (WAG-DI) at the bid of $2.45.

Too much time has passed, only one month left, and I don't think it can trade the $45 + 3.10 = $48.10. Has tended to want to stick closer to $45.00.

Jeff Bailey : 3/16/2007 2:28:20 PM

This "could be it" ... See the action in the MAR $142 and $144 Puts. It is UPtick action. NOBODY is really playing a directional with those. It has to be a NAKED PUT seller BUYING BACK from sometime ago, and BUYING to close.

My thoughts anyway.

Keene Little : 3/16/2007 2:26:39 PM

It looks like we're close to getting a 5-wave move down from this afternoon's bounce. That should set up another bounce to correct this drop. Watch for a 38%-62% retracement again and then hit it short again.

The risk for bears here is that the decline from this morning's high will only be a 3-wave pullback and this leg down will finish it. That's why keeping your stop at this afternoon's high is the best place--if price gets above that level then we'll probably see the rally continue higher.

Jeff Bailey : 3/16/2007 2:25:35 PM

CVS $32.81 -1.58% ...

Jeff Bailey : 3/16/2007 2:24:52 PM

Other than WAG $46.68 +2.09% that is.

Jeff Bailey : 3/16/2007 2:23:58 PM

VIX.X 17.53 +6.63% ... something's up.

Jeff Bailey : 3/16/2007 2:21:20 PM

Swing trade long blow it out alert ... Sell the 300 share long position in the iShares Japan (EWJ) at the bid of $14.35.

Jeff Bailey : 3/16/2007 2:11:03 PM

Thought I found it, but those VIX Mar $18 Calls are from this morning's settle I would think. Posted 10:48:46 per my time/sales.

Keene Little : 3/16/2007 2:07:29 PM

As I mentioned before, use the this afternoon's bounce high as your stop. If you're using puts you can give yourself a little more wiggle room and use today's high for your stop. The EW pattern, particularly considering the fractal pattern I pointed out earlier (11:48), is set up for a strong decline next week. But any rally back above today's high would say another pattern is playing out. Go for the short play and we'll see how it looks by the end of the day.

Jeff Bailey : 3/16/2007 2:06:09 PM

USD/JPY "calm" from last check at 116.81

Jeff Bailey : 3/16/2007 2:05:24 PM

There was either a very INFLUENTIAL trade take place in an equity, or in the VIX.X options themselves.

Jeff Bailey : 3/16/2007 2:04:48 PM

That VIX.X "pop" came from a 5-minute close of 16.127 to an opening 5-minute bar of 17.00.

VERY UNUSUAL to see that action intraday.

Keene Little : 3/16/2007 2:03:23 PM

Would you wait on the RUT put??

Considering the downside opportunity here I think I'd buy a few puts before the weekend.

Jeff Bailey : 3/16/2007 1:59:26 PM

SPY April $135 Puts have moved up to #4. Were #10.

Up/DnTick 2,850:12. Last $1.35

Jeff Bailey : 3/16/2007 1:57:26 PM

Duh ... 17.00

Jeff Bailey : 3/16/2007 1:55:55 PM

Could be the VIX.X itself.

Jeff Bailey : 3/16/2007 1:54:31 PM

XOM $70.11 -0.82% ... big cap weight in S&P. Maybe some option action here for $70 giving VIX.X the pop?

Jane Fox : 3/16/2007 1:52:55 PM

NEW YORK (MarketWatch) -- Blackstone Group is working with Goldman Sachs on an initial public offering, a major move by one of the most visible giants in private equity, according to a news report Friday.

Blackstone Group to offer the public about 10% of its management company in a $4 billion IPO with underwriters Lehman Brothers (LEH) and Citigroup (C) , according to a Wall Street Journal report that cited a person familiar with the deal.

Such a structure would mirror Fortress Investment Group (FIG) , which floated shares of its management firm without revealing the specific machinations of its hedge funds and other investments.

Reports of the deal came just weeks after hedge-fund manager Fortress rang up a 68% gain as the best performing IPO so far in 2007.

Jeff Bailey : 3/16/2007 1:48:54 PM

Not seeing anything unusual in the SPY Option Chain (sorted it by volume as VIX.X popped) via CBOE reported trade.

Keene Little : 3/16/2007 1:45:05 PM

If you shorted this bounce I'd now pull my stop down to just above the bounce high. It shouldn't get back up there if the correction to this morning's decline is finished. We should be starting the next leg down unless it gets back above the last bounce high in which case the correction would clearly still be in play. The NDX is staying a touch more bullish here.

Jeff Bailey : 3/16/2007 1:43:03 PM

SPY $138.74

Jeff Bailey : 3/16/2007 1:42:32 PM

SPY Most active CBOE Options ... APR $140 Put , MAR $135 Puts, APR $138 Puts, MAR $139 PUTS

Jeff Bailey : 3/16/2007 1:38:51 PM

VIX.X alert! 17.04 +3.71% ... popping higher.

Jeff Bailey : 3/16/2007 1:29:55 PM

Most NH's since 9:5 from 02/27/07.

Keene Little : 3/16/2007 1:29:34 PM

The bounce in the DOW and SPX has achieved two equal legs up so failure could occur at any time.

Jeff Bailey : 3/16/2007 1:29:18 PM

SPX's NH/NL are 9:0

Jeff Bailey : 3/16/2007 1:28:37 PM

01:00 Internals found at this Link

Keene Little : 3/16/2007 1:27:22 PM

Ideally we'll get one more minor push higher now to finish wave-c of an a-b-c bounce of this morning's pullback and that's where I'd short it.

Jane Fox : 3/16/2007 1:20:43 PM

McMillan's Weekly Commentary - This week, the lows were successfully retested (so far). It is possible that the worst is over for this decline.

As for the $SPX chart, there is clear support and resistance. The support is the 1365-1375 area mentioned above. If there is another retest, we would expect that area to hold -- and perhaps to see some of the other indicators, such as put-call ratios, turn bullish by then as well. Of course, if that support were to fail, then a whole new round of bottom- forming would have to take place. As for the upside, there is resistance on the $SPX chart at 1410. A breakout over that area would be quite bullish. In the past, there have been some bottoms that set up with about the same amount of work as we've seen in this one (July, 1996, for example). As long as $SPX remains within those two levels, we'll retain a neutral opinion regarding the $SPX chart.

The equity-only put-call ratios continue to race higher, as put volume has been heavy for nearly three weeks -- even on days when the market is up. As a result, both equity-only ratios have correctly remained on sell signals. They are now becoming quite oversold, as they have exceeded the highs set at last summer's bottoms. However, an oversold market can continue to decline. These ratios won't turn bullish until they roll over and begin to trend downward.

Market breadth has been all over the map, and at extreme levels from day to day. When the market has suffered big declines in price, declining issues swamped advancing issues. In fact, February 27th and March 13th were two of the biggest ratios of declines over advances in history. However, when the market rallies, advances dwarf declines.

Finally, the volatility indices have been quite interesting. During Wednesday's drop to new lows, $VIX rose to a new high -- above 21. It has since fallen back quite a bit. A spike peak in $VIX is a buy signal.

In summary, we think there is a good chance that the lows are in, although they may be retested once more. Any sustainable rally will need to have buy signals from the equity-only put-call ratios -- something that has not been forthcoming so far. For now, though, we remain somewhat neutral on the market until more pieces of the puzzle fall into place.

Jeff Bailey : 3/16/2007 1:14:42 PM

Today I'm also thinking about JP Morgan's (JPM) buying of Amaranth's "sideways" natural gas futures positions.

Jeff Bailey : 3/16/2007 1:13:02 PM

NFI $6.05 +17.47%

LEND $11.66 +23.75%

NDE $29.22 -0.51%

HBC $85.77 -0.36%

C $49.60 -1.05%

Jeff Bailey : 3/16/2007 1:11:19 PM

DJUSHB 622.67 -1.05% ...

Jeff Bailey : 3/16/2007 1:10:44 PM

BSC -2.02%

GS $199.10 -0.89%

LEH -2.32%

Jeff Bailey : 3/16/2007 1:09:52 PM

Dreyfus High Yield (DHF) $4.25 +1.19% ...

Jeff Bailey : 3/16/2007 1:09:00 PM

Some interesting, if not meaningful market reactions to today's "news" out of LEND.

Marc Eckelberry : 3/16/2007 1:08:01 PM

I posted this link on my blog earlier, here it is for the monitor. It is a top notch analysis, courtesy Bloomberg, unhedged and concise (always go to Europe for that, US analysts have too many conflicts of interest): video

Jeff Bailey : 3/16/2007 1:03:39 PM

01:00 Market Watch found at this Link

Jeff Bailey : 3/16/2007 1:00:56 PM

BSC-CJ are $0 x $0.05 ... 566 contracts traded (all exchanges) ... low/high has been $0.01 / $0.25.

BSC $145.79

Jane Fox : 3/16/2007 12:56:47 PM

This morning the internals were neutral but quickly turned to bullish with a TRIN at 0.65 and the VIX hovering at daily lows. The picture has once again turned and the internals are downright bearish now. Link

Keene Little : 3/16/2007 12:36:49 PM

We're just consolidating again after this morning's pullback but if it manages to give us another leg up in the bounce then watch for an opportunity to short it. It doesn't look like it should drop to a new low directly from here but if it does then it could pick up speed to the downside so shorting a breakdown could also work. Just keep your stop relatively close in case it's a head fake break.

Jeff Bailey : 3/16/2007 12:24:26 PM

USD/JPY Cross Rate PnF Chart (updated) at this Link ... USD/JPY currently 116.75

Jeff Bailey : 3/16/2007 12:05:44 PM

iShares Japan (EWJ) $14.37 -0.34% ... IF the EWJ were to close here, then next week's WEEKLY Pivot Levels would be .... $13.73, $14.06, Piv= $14.44, $14.77, $15.15.

Marc Eckelberry : 3/16/2007 12:05:16 PM

If YG closes above 653, 50 DMA, it should be poised for more gains next week.

Marc Eckelberry : 3/16/2007 12:04:47 PM

As did NQ 1754.50, so option related noise is coming back. Note on Gold, XAU has call resistance at 135/140 and that is also why we pulled back.

Marc Eckelberry : 3/16/2007 12:03:43 PM

YG 651 did find buyers.

Marc Eckelberry : 3/16/2007 12:03:29 PM

I like to look at past history and the most likely scenario I see is 70's style stagflation, which was good for oil and gold. Right now, we have this carry trade business and a liquidity bubble about to burst as hedgies cover the rising Yen by buying the Yen. But my bet is that they will diversify instead of just buying Yen and that diversification will be in gold and energy.

Jeff Bailey : 3/16/2007 11:57:06 AM

iShares Japan (EWJ) $14.37 -0.34% ... unconventional $0.05 box chart Link

About as close as I can get to have the EWJ "look like" the $NIKK.

Jeff Bailey : 3/16/2007 11:52:51 AM

Bullish % For Japan at this Link

Keene Little : 3/16/2007 11:48:51 AM

This SPX 30-min charts shows what I mean about the fractal patterns--the recent consolidation and minor new high looks the same (in a smaller version) as the consolidation and minor new high last week. What followed was a swift decline and we could be setting up for exactly the same result (but stronger). A bounce back up to about 1392 could set up a good shorting opportunity. Just remember it is opex Friday and we could see some whipsaw price action. Link

Jeff Bailey : 3/16/2007 11:44:52 AM

Last night's action in Japan's Nikkei-225 ($NIKK) Link had the index falling in the early part of the session to 16,644 on the Tertiary report (+1.6%), then coming back to slightly positive 16,939, then fading towards its close to finish down 116 points, or -0.69% at 16,744.

So, as "close" as 16,939 is to 16,950, it wasn't 16,950.

Did it see a 3-box reversal to 16,750? Yes. Session low was 16,644, so O's down to 16,650.

Sensing some pressure building based on observation here.

Also sensing some stronger economic data out of Japan, but seeing dollar weakness and yen strength. More pressure.

Marc Eckelberry : 3/16/2007 11:44:50 AM

But that VIX is sure looking ugly for stocks right now.

Marc Eckelberry : 3/16/2007 11:43:23 AM

I still think they wll try and close as near to QQQQ 43 as they can.

Marc Eckelberry : 3/16/2007 11:42:56 AM

When the Yen rallies, sell US stock market rallies. Works everytime.

Marc Eckelberry : 3/16/2007 11:42:07 AM

As is NQ weekly pivot at 1754.50.

Marc Eckelberry : 3/16/2007 11:41:51 AM

Anyway, 651 is holding.

Marc Eckelberry : 3/16/2007 11:41:15 AM

Keene, I just read your comment. Gold is still a carry trade, but at some point, it will be heavily bought for the reasons I stated.

Jane Fox : 3/16/2007 11:39:29 AM

The bulls fumbled the ball and the bears grabbed it and are running for a touchdown. AD line -750 and AD volume well under 0 and falling.

Marc Eckelberry : 3/16/2007 11:37:50 AM

I guess we can blame the hedge funds for this one, gold is also a carry trade now. The Yen is rising, they need cash so they sell everything. It's getting old.

Keene Little : 3/16/2007 11:37:43 AM

This morning's price action, when looking at the DOW and SPX has me wondering if we're seeing the same pattern playing out as we did during March 8-12, essentially a smaller fractal of that price pattern. After a consolidation from March 8th into the morning of the 12th we got a small rally that then failed and dropped hard from there. With a similar pattern playing out this morning--a minor new high and now price falling hard, we could be seeing the same setup. It may be time to short the next bounce that corrects this morning's decline since the next drop could be fast.

Jane Fox : 3/16/2007 11:35:31 AM

ES and Ym are now testing their daily lows and I expect to see some kind of support here. I

Jeff Bailey : 3/16/2007 11:31:26 AM

BSC 145.94 -1.72% ... comes to test DAILY S1. If not back above DAILY Pivot by about 12:30, it's going to take a 5-leaf clover to have a shot above WEEKLY Pivot.

Keene Little : 3/16/2007 11:29:44 AM

I've got a different take on gold than Marc. The decline and bounce in gold looks just like the one for equities and I expect them to trade in synch in the next leg down. How far it drops is the question in my mind--either to test the 575 low or more likely, in my opinion, to head down to the $500 area (potentially lower) before setting up another rally leg. Link

As we head into a difficult time for the market and our economy we should find most asset classes under selling pressure. So I'm looking at the bounce in gold as a shorting opportunity. The bounce off the low on March 5th will have two equal legs up at 662.30 (April contract) and that's where I'd look to short it.

Jeff Bailey : 3/16/2007 11:26:46 AM

Cooper Industries (CBE) $46.45 +0.56% ... 2:1 split today.

Jeff Bailey : 3/16/2007 11:25:57 AM

NYSE NL Symbols: BFT, NTR (check this one out with Mr. Greenspan's comments from yesterday), MFG (checking), MNI, EGY

Jeff Bailey : 3/16/2007 11:23:59 AM

11:00 Internals found at this Link

The 4 New Lows at the big board looked unusually few. Looks correct though when compared to QCharts' NYSE New Lows.

Jane Fox : 3/16/2007 11:21:18 AM

ER and NQ are now testing PDLs.

Jeff Bailey : 3/16/2007 11:18:50 AM

Bally Total Fitness (BFT) $0.97 -51.25% ... losing some weight this morning.

Marc Eckelberry : 3/16/2007 11:12:05 AM

The Persian Gulf state of Qatar tripled its gold reserves in January from the month prior in order to protect itself against a weakening dollar, according to the Qatar Central Bank. Link

Jane Fox : 3/16/2007 11:11:56 AM

TICKS -800

Jane Fox : 3/16/2007 11:11:43 AM

Although the markets have made higher highs and peeked above their PDHs, they have now fallen back into their consolidation ranges and are testing their daily lows.

Marc Eckelberry : 3/16/2007 11:07:56 AM

YG climbs up to just under 20 DMA at 660 and pulls back with the drop in stocks. At some point, the idiots selling gold in step with stocks will realize that it is a commodity that tracks the lower dollar and inflation pressures, not equities. For now, just buy the dips that hold above 651, 50% 2007 and ignore the noise.

Jeff Bailey : 3/16/2007 11:03:10 AM

11:00 Market Watch found at this Link

Keene Little : 3/16/2007 10:59:48 AM

One other possibility that I didn't show on the NDX chart is that this rally could fall out of bed at any time and start heading immediately for new lows. Because the wave pattern is currently not clear I can't say with any confidence that that will happen but it remains a possibility. It unfortunately takes a move all the way back down to the lows and a break to new lows below Wednesday's in order to confirm that (instead of getting just a pullback from here). But if Wednesday's lows should get taken out then you'll want to close your eyes, get short and just hang on for the ride.

Jeff Bailey : 3/16/2007 10:56:24 AM

USD/JPY 116.75 -0.68%

Marc Eckelberry : 3/16/2007 11:00:14 AM

This markets wants to sell badly, the only thing holding it up has been option pins, especially QQQQ 43.
Gold is the winner as well it should be. All those new ETF's have brought in retail traders and weak hands, raising cash out of fear, not realizing that gold is the safest investment right now. That's ok, because traders with ice in their veins can profit from crowd stupidity. Inflation is still a threat, the economy is slowing and once jobs start declining (they will, it is a lagging indicator) we will have all the ingredients for stagflation. That is good for gold and oil. I spent some time on the monitor Wednesday giving you my trades on the metal, I hope in the end you stuck it out, as I did (even after that silly 10 cent stop, I wrote that I am going back in at 639 and left it up to you). What I have definitely learned is that YG trades need very wide stops now that everyone is playing it. It used to be much more precise. In other words, you have to do some real thinking and commit to the process.

Keene Little : 3/16/2007 10:48:30 AM

As far as looking ahead for where prices might be headed next week, a lot will depend on how today goes. If the push to new highs for the RUT and NDX continues higher then there are two possibilities that I currently see playing out. I'll use the NDX 60-min chart to show them: Link

The first is the short term bullish wave count I've had on the charts since the pullback from March 9th which calls for a stronger rally leg up to complete an A-B-C correction to the decline from the February high. I'm showing upside potential for wave-C, the current rally, to 1786-1790. Between the broken trend line along the lows since November 3rd, the 50-dma and a Fib projection (where wave-C = 162% of wave-A) all in this area, it makes for a good upside target if the bulls can keep this going.

The other possibility is a longer sideways consolidation to work off the oversold conditions from the fast drop from the February high. This pattern would create a large A-B-C move down from that Feb high and wave-C down into April would be expected to be at least equal to the move down from February. The uptrend line from April 2005 is currently near 1560 and would be a good downside target. The consolidation idea could mean a pullback today and then another bounce on Monday/Tuesday to get back up to near 1760 before rolling over again to test recent lows.

Jeff Bailey : 3/16/2007 10:45:08 AM

BSC $146.66 -1.30% ... They could have held off on the "we'll be buyers of LEND's mortgages" until Monday in my opinion. (see 10:06:59)

Jeff Bailey : 3/16/2007 10:41:33 AM

SPY Options Montage ... with March's 10-most heaviest OI's marked at this Link

1-4 are all puts ranging from $123 to $131.

Jeff Bailey : 3/16/2007 10:28:16 AM

Looking at the SPY's OI as of last night, I'd say (eyeballing) SPY's "Max Pain" looks more like $140.10.

Jeff Bailey : 3/16/2007 10:20:26 AM

SPY's "Max Pain" Theory for March tabulated at $143.00.

Jeff Bailey : 3/16/2007 10:19:24 AM

"Bad tick" in the SPY just before 11:00 AM EDT to $141.00.

Jane Fox : 3/16/2007 10:18:18 AM

VIX hovering at daily lows and AD volume making new daily highs tells me we will be seeing highers highs.

Keene Little : 3/16/2007 10:14:37 AM

SPX has pushed slightly above its downtrend line from February but it's not exactly a ball of fire here. It's struggling with its 30-min 100/130-pma's and its 10-dma at 1397. A failure here would leave a bearish divergence on its 30-min MACD. The NDX and DOW are also stuck at the same respective averages.

The RUT is the only one looking a little more bullish in having broken its downtrend line yesterday, pulled back along the top of it and has now rallied to a new high. I think following the RUT may be our best guide for now. Bullish upside targets for it are first 790 and then all the way back up to 804.

Jeff Bailey : 3/16/2007 10:08:19 AM

Lehman Bros. (LEH) $72.32 -0.97% ...

Jeff Bailey : 3/16/2007 10:07:55 AM

Goldman Sachs (GS) $199.68 -0.60% ...

Jeff Bailey : 3/16/2007 10:06:59 AM

Accredited Home Lending selling loans at discount ... MarketWatch Story Link

LEND $12.26 +30.01% ...

BSC $147.12 -0.92% ...

Jeff Bailey : 3/16/2007 10:02:30 AM

10:00 Market Watch found at this Link

Jeff Bailey : 3/16/2007 9:59:59 AM

India's Reliance, Dow to set up $20 Billion JV (updated) Reuters Story Link

DOW $45.49 -0.67% Link ...

Jane Fox : 3/16/2007 9:56:06 AM

Here is how the markets are trading in relation to their PDRs. Can you say sideways consolidation? Link

Jane Fox : 3/16/2007 9:51:27 AM

TRIN is also under its PDL.

Jane Fox : 3/16/2007 9:51:12 AM

VIX is hovering at its daily lows and TRIN is 0.56. Not a time to be short.

Jane Fox : 3/16/2007 9:46:14 AM

The internals are giving me a mixed picture so I will be sitting on my hands for now. The consolidation we saw yesterday suggests higher highs but the internals are neutral to bearish - sort of. Price is just gyrating within the consolidation zone so keep your powder dry for now - we do not see the whites of their eyes yet.

Jane Fox : 3/16/2007 9:36:15 AM

AD line has a bearishness to it but not overly so. AD line -244

Jane Fox : 3/16/2007 9:25:04 AM

Looks like Gold is indeed making a higher low but I will need to see a higher high to confirm it (higher than the March 9th high). Once I do I will once again open my GLD long. Link

Keene Little : 3/16/2007 9:23:49 AM

A retest of yesterday's high for ES, at 1408.50 would be a test of its downtrend line from February so it will need to break that level to through resistance. This will be about SPX 1394.50. Which reminds me, I need to update the futures premium numbers which I'll do once the numbers settle out early this morning.

Jane Fox : 3/16/2007 9:20:26 AM

Here is an interesting article on the Dow Theory. Link

Jane Fox : 3/16/2007 9:19:23 AM

NEW YORK (MarketWatch) -- Crude-oil futures were flat early Friday, holding under $58 a barrel, as traders continued to mull a warning from the Organization of the Petroleum Exporting Countries that the volatility in global financial markets could impact economic growth and lower energy demand.

Crude for April delivery was last down 24 cents at $57.79 a barrel in electronic trading. On Thursday, the contract closed lower after OPEC concluded a Vienna meeting with a decision to leave production quotas unchanged -- just as the market had expected.

"Opec ministers decided on Thursday to keep their official output cut of 1.7 million barrels per day in place for the next six months as they see supply and demand in balance for the rest of the year," said Jon Rigby, analyst at UBS. But the cartel also said it expects the market to remain volatile despite that balance, and said it views the turmoil in financial markets as a key threat.

OPEC will hold its next meeting on Sept. 11 in Vienna.

Jane Fox : 3/16/2007 9:18:42 AM

WASHINGTON (MarketWatch) - U.S. industrial output rebounded in February led by higher utility output because of colder-than-average temperatures.

Industrial output rose 1.0% in February, the biggest gain since November 2005. Capacity utilization rose to 82.0, the highest level since September, the Federal Reserve reported Friday.

All major industry groups except construction supplies recorded production gains in the month. The increase in output in February was above forecasts. Economists surveyed by MarketWatch expected a 0.6% increase. Capacity utilization was expected to rise to 81.5%.

But economists had expected the rebound because of the cold February weather. In addition, the Institute for Supply Management factory index improved in the month.

Early indicators of March factory activity have been weak. Both the New York and Philadelphia factory indexes showed very little growth. See full story.

Keene Little : 3/16/2007 9:11:50 AM

Equity futures are up off their overnight lows, with a surprising jump after the 8:30 reports. I don't see anything bullish about higher inflation numbers but maybe I'm missing something. Or maybe futures are being manipulated higher so that the SPX settlement price doesn't get whacked first thing this morning. Hard to know for sure.

After yesterday's consolidation and the overnight lows it wouldn't be at all surprising to see prices dip sometime this morning back down to test yesterday afternoon's and/or the overnight lows. What happens from there (or even if we get the dip) is a bit of a guess. Normally the consolidation pattern is bullish--we rallied up into it and it should resolve to the upside. But the past two sharp sell offs were preceded by exactly this kind of choppy pullback and therefore we need to remain on guard for that possibility. Be careful out there.

Jane Fox : 3/16/2007 9:08:47 AM

NEW YORK (MarketWatch) - A pending winter storm in the Northeast forced several airlines to preemptively cancel flights Friday, including JetBlue Airways Corp. (JBLU) , which struggled with its operations during an ice storm a month ago that caused more than 1,000 cancellations. JetBlue, which is based in New York's John F. Kennedy International Airport, Delta Air Lines (DALRQ) and other carriers offered penalty-free ticket changes ahead of forecasted heavy rain, snow, sleet, and gusty winds across parts of the Northeast.

Jane Fox : 3/16/2007 9:07:41 AM

Sometimes during the overnight session you get to see the inverse relationship between Gold and US $ and this overnight session was one of those times. You also can see the direct relationship between Gold and Oil. Link

Jane Fox : 3/16/2007 9:03:27 AM

A little volatility overnight but only NQ threatened its PDL so the bulls are still OK. The overnight session was mostly just a continuation of the consolidation we witnessed yesterday. Link

Marc Eckelberry : 3/16/2007 8:57:57 AM

Gold holds on to 651, 50% and is now trading above 50 DMA. Rock and roll. The recent sell-off was a buying opportunity and this summer should be a dandy for the metal. All time highs coming and it is now a buy and hold above 650. CPI this morning is the one danger, so move your stops up to overnight lows (646.60). Highly unlikely they drop it there now, but be disciplined if you are long.

Jane Fox : 3/16/2007 8:54:40 AM

Dateline WSJ - U.S. consumer prices rose last month on higher food and energy prices while underlying inflation crept up modestly, suggesting that inflation still remains an upside risk.

The data support expectations that the Federal Reserve will hold official interest rates steady when it meets next week and also maintain its tightening bias.

The consumer-price index rose 0.4% in February, the Labor Department said Friday, compared to January's 0.2% rise. The core CPI, which excludes food and energy, increased 0.2% after rising 0.3% in January.

Unrounded, the CPI rose 0.371% last month. The core CPI advanced 0.241% unrounded

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