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Keene Little : 3/21/2007 12:45:33 AM

Wednesday's pivot tables: Link and Link

Marc Eckelberry : 3/21/2007 12:19:12 AM

This will make you puke: Link

Jeff Bailey : 3/20/2007 10:56:52 PM

02/20/07 to 03/20/07 Sector Bell Curve at this Link

The SPX closed at its multi-year high on 02/20/07. I've type the "positioning" of other major market bullish % on the bell curve.

Caterpillar is a MACHinery and Tools

Dow Chemical is a CHEMicals

Valero Energy is an OIL

Indymac is a FINAnce

Accredit Home Lenders is a FINAnce

OI Technical Staff : 3/20/2007 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The Market Monitor has been archived.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 : 3/20/2007 9:44:06 PM

What do you think about what is taking place in the subprime area?

Isn't a free market economy fascinating?

The Fed doesn't need to do anything in my opinion, and if politicians would sit on their hands regarding this issue (other than mandates regarding full disclosures to lendees) the better off we'll all be.

Treasury Secretary Paulson "warned" about trying to over regulate the industry, but I'm not sure all of Washington has been listening.

I'm hearing too many things out of Washington D.C. of late that sounds like socialism.

There was news today that a privately held subprime lender went under (bankruptcy) today.

How LEND has pulled off what they've done, is remarkable in itself. They've "bought some time."

I've never had to meet a margin call, and never want to, but they did, and can try to rebuild.

Jeff Bailey : 3/20/2007 9:36:36 PM

March-June Fed fund futures all right around 94.75.

August (ff07q) at 94.90 (100 - 94.90) = 5.10%

December (ff07z) at 95.16 (100 - 95.16) = 4.84%

FOMC's current target is 5.25%.

One move I would NOT make as a trader is this.

IF the FOMC were to shock with a 25bp rate cut, expect a "knee jerk" move higher, but be ready for selling, which could turn into a meaningful reversal lower.

I can't remember the last time that we saw 3 different days during the same month when trading curbs have been implemented (2 down and 1 up so far). That should at least be a hint that there's some BIG money making some BIG decisions in a very short period of time.

Jeff Bailey : 3/20/2007 9:27:04 PM

Looking at other tech heavy names like MSFT and INTC, you'd think tonight's extended was a Friday before a 3-day weekend. No interest at all.

Jeff Bailey : 3/20/2007 9:24:29 PM

ORCL $17.55 +2.15% ... last tick extended was $18.15.

Jeff Bailey : 3/20/2007 9:23:36 PM

QQQQ $43.58 +0.71% ... last tick extended was $43.55.

Jeff Bailey : 3/20/2007 9:21:05 PM

Oh! One thing (among many) that I've wanted to mention to US Tax Payers. If you have a health savings account, President Bush signed a bill that allows individuals to transfer money from a retirement account into their health savings accounts.

Check with your tax advisor for details and see if it might work for you. Especially if you're getting up there in years like I am. ;)

Jeff Bailey : 3/20/2007 9:18:18 PM

Something just doesn't feel/look as bullish as things were today.

Here's today's SPY option chain, with SPY closing at the current April "Max Pain" theory level Link ... I have little argument with selling OUT the money puts $137 or lower, but some hefty UpTick at $140 Puts, an SPY trading $140.90 extended, after closing $140.97, with "bullish" responses to software giant ORCL, and ADBE.

Even the DnTick vs. UpTickVol on the SPY looks a little fishy.

As I was eating Subway this evening, I started thinking to myself .... "You've got to get your taxes started."

Watch/monitor the VIX.X closely. My gut feel is that we might see a little weakness, mmmmmaybe SPY $138-ish, but then a "cram it up their throats" into the April 16 tax deadline.

Jeff Bailey : 3/20/2007 6:32:29 PM

Good gravy ... bulls are making some money in shoes still.

GCO, NKE, PSS

Jeff Bailey : 3/20/2007 6:27:13 PM

Adobe's (ADBE) Earnings Press Release Link

Consensus was for EPS of $0.29 on Revenue of $655.6M

Jeff Bailey : 3/20/2007 6:25:08 PM

Adobe Systems (ADBE) $40.74 +1.24% ... surges to $42.10 on headline numbers.

Jeff Bailey : 3/20/2007 6:21:33 PM

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

Jeff Bailey : 3/20/2007 5:50:55 PM

USD/JPY finished 117.27 -0.24, or -0.20%. High/Low was 118.02/116.92.

Jeff Bailey : 3/20/2007 5:37:11 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 3/20/2007 5:34:34 PM

Closing Internals found at this Link

Jeff Bailey : 3/20/2007 5:06:19 PM

Relative Strength chart of MTH vs. ITB Link

Jeff Bailey : 3/20/2007 5:05:43 PM

Relative Strength chart of MDC vs. ITB Link

Jeff Bailey : 3/20/2007 5:05:39 PM

Relative Strength chart of NVR vs. ITB Link

Jeff Bailey : 3/20/2007 5:05:34 PM

You can pretty much match the TECHNICALS with the fundamentals. I'm not "buying" MorningStars view of MTH. Doesn't look like the market is either. (see cash flow)

Jeff Bailey : 3/20/2007 5:05:21 PM

Meritage Homes (MTH) $33.02 +0.91% Link ... mentioned in the MorningStar article, but not a component of the ITB. Rec. Turnover 53.47, Asset Turnover 1.671 and Cash Flow/share -1.766.

Jeff Bailey : 3/20/2007 5:00:20 PM

MDC Holdings (MDC) $49.97 +0.20% Link ... it is a component of the ITB. Rec. Turnover 31.72, Asset Turnover 1.236 and Cash Flow/share 6.735.

Jeff Bailey : 3/20/2007 4:59:47 PM

NVR LP (NYSE:NVR) $707.00 +0.42% Link ... it is a component of the iShares DJ US Home Construction (ITB) $36.25 -0.43%, but not mentioned in MorningStar's article.

According to QCharts, NVR's Receivables Turnover is 232.463, Asset Turnover is 2.614 and cash flow/share is 98.981.

Jeff Bailey : 3/20/2007 4:48:55 PM

Excellent read regarding Real Estate Link

In QCharts' "portfolio" ... create a column for Receivables Turnover, Asset turnover and Cash Flow for the builders.

Jeff Bailey : 3/20/2007 4:37:11 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 3/20/2007 4:29:33 PM

April Unleaded (rb07j) settled down $0.016, or -0.82%.

May Unleaded (rb07k) settled down $0.0079, or -0.417% at $1.8912.

In the U.S. Market Watch, I "roll" or begin posting the various May energy futures contracts to go with Crude Oil.

Marc Eckelberry : 3/20/2007 4:19:26 PM

I would not short a commodity that has done 5 days of higher highs and higher lows (gold). Usually one waits for a lower low intradya then hit it, but it could work if 661 holds as resistance for gold. commodities tend to be very momentum driven though.

Jeff Bailey : 3/20/2007 4:16:48 PM

Oracle (ORCL) Earnings Press Release Link

Marc Eckelberry : 3/20/2007 4:16:19 PM

Larry must have whispered a word or two to his hedge fund buddies. No wonder the bids would not stop even though most of the big techs were down.

Jeff Bailey : 3/20/2007 4:14:41 PM

Microsoft (MSFT) $27.84 +0.03% ... $27.98 extended.

Jeff Bailey : 3/20/2007 4:13:48 PM

SPY $141.00 +0.57% .... $141.01

Jeff Bailey : 3/20/2007 4:13:18 PM

QQQQ $43.57 +0.69% .... $43.59 extended.

Keene Little : 3/20/2007 4:12:54 PM

End-of-day update on silver short (and gold since same chart setup)--the pullback is so far only a corrective looking affair with just a 3-wave pullback so far. The setup is there for an immediate sell off tomorrow but that has to happen otherwise this will head higher again. Overnight trades tend to get whipsawed so be a little careful on stop placement.

If I were placing my stop now based on today's pattern I'd have it just above the mid-day high (13.458) so maybe 13.470 to keep it away from the stop hunters. I'm keeping mine above today's high in hopes of staying away from those nasty buggers and then I'll pull it down tomorrow if we get the drop.

Marc Eckelberry : 3/20/2007 4:12:31 PM

ORCL just wiped out any remaining shorts...

Jeff Bailey : 3/20/2007 4:12:17 PM

Oracle (ORCL) $17.55 +2.15% ... surging to $18.50 extended on headline numbers.

Jeff Bailey : 3/20/2007 4:11:19 PM

April Crude (cl07j) settled up $0.14, or +0.25% at $56.73.

May Crude (cl07k) settled down $0.45, or -0.75% at $59.25.

Jeff Bailey : 3/20/2007 4:03:57 PM

Indymac (NDE) $28.86 +5.25% ... I show the NDE-QE trading 1,355 contracts today, with low/high of $1.80 / $2.20.

Jeff Bailey : 3/20/2007 3:59:06 PM

Swing trade long 1/2 position alert ... for the US Oil Fund (AMEX:USO) at the offer of $48.49. Stop goes $47.25, target $54.00.

Jeff Bailey : 3/20/2007 3:55:07 PM

Oracle ... consensus is for EPS of $0.23 on Revenue of $4.33B. Link

Marc Eckelberry : 3/20/2007 3:53:40 PM

Jane, I meant pinning in the 0% range, which is what I use with Qcharts. I use the % in range quite often, very efficient for the VIX, no need for a chart.

Jeff Bailey : 3/20/2007 3:53:43 PM

Oracle (ORCL) $17.57 +2.27% Link ... earnings after the bell.

Jeff Bailey : 3/20/2007 3:52:04 PM

Not a broker in the bunch, but QQQQ $43.47 +0.46% .. also tested its 19.1% retracement today.

Jeff Bailey : 3/20/2007 3:50:21 PM

Probably plenty of time before thinking long HAL

Jeff Bailey : 3/20/2007 3:50:04 PM

Baker Hughes (BHI) $64.27 +0.56% ... about 22 sessions since last quarter's report.

21-day SMA here at $64.32.

Jeff Bailey : 3/20/2007 3:48:32 PM

Halliburtion (HAL) $30.17 -6.85% Link

Jeff Bailey : 3/20/2007 3:47:09 PM

HALLIBURTON FALLS ON 1Q EPS FORECAST

DJ- Shares fall 7% after Halliburton forecasts 1Q EPS of 49c-54c, below analysts' expectations of 59c. Estimate includes any losses related to KBR's gas-to-liquids project and any charges related to KBR's Brown & Root-Condor Spa venture.

Keene Little : 3/20/2007 3:46:24 PM

Best guess on the short term pattern is that a push higher here could be finishing the 3rd wave in the move up from March 14th. That would set up a lazy choppy sideways/down pullback tomorrow (fitting for the time in front of FOMC) to be followed by a 5th wave up to new highs post-FOMC.

Jeff Bailey : 3/20/2007 3:39:30 PM

YM 12,380 ... presses session highs.

Keene Little : 3/20/2007 3:39:23 PM

Nice jam job into the close. Shove those bears aside.

Jeff Bailey : 3/20/2007 3:39:05 PM

I'm not going to "jump around" from USD to various relationships, I'd strongly suggest sticking with the USD/JPY . It should "show" any USD/HKD (Hong Kong Dollar) impact too.

Today alone, I must say that I am VERY IMPRESSED with equity action. It should have been so easy to just step back on YM toward its DAILY Pivot, if not at least 12,330.

You think I was overly bearish in 2nd half of today's session, you can be assured there are some from last couple of weeks.

Jane Fox : 3/20/2007 3:33:57 PM

You mean this kind of VIX pinning Marc? Link

Marc Eckelberry : 3/20/2007 3:32:49 PM

This kind of VIX pinning leads to selling post close, usually.

Jeff Bailey : 3/20/2007 3:32:36 PM

Another currency relationship I'd really start to keep an eye on (see today's revalation at 10:59:15) is the USD/HKD currently 7.812.

Jane Fox : 3/20/2007 3:32:27 PM

TICKS +1000.

Jane Fox : 3/20/2007 3:32:21 PM

CNN - Radio traffic from the scene indicates a 12-year-old Boy Scout missing since Saturday in the North Carolina forest has been found alive, National Park Service spokeswoman Tina White said. YAAH!!!

Jane Fox : 3/20/2007 3:31:48 PM

AD volume is making new daily highs and VIX new daily lows. You know the Mantra!

Jeff Bailey : 3/20/2007 3:27:43 PM

YM 12,370 and USD/JPY 117.23 ... this one (relationship) is a LONG way from being over.

Jeff Bailey : 3/20/2007 3:26:15 PM

some "crazy" action took place toward cl07j settlement. That one is over now.

Jeff Bailey : 3/20/2007 3:24:30 PM

Broker/Dealer Index (XBD.X) 231.63 +0.32% ... didn't "see the light" above 233.27.

Jeff Bailey : 3/20/2007 3:23:19 PM

Inymac (NDE) $28.54 +4.04% .... juuuust back under WEEKLY Pivot ($28.82).

Jeff Bailey : 3/20/2007 3:22:15 PM

Tomorrow's big number in my opinion is going to be the MBA's weekly application data.

Might get a look as to what, if any, credit/liquidity "crunch" has taken place regarding more stringent loan qualification requirements.

Not just the subprime either.

Keene Little : 3/20/2007 3:19:41 PM

This is a chart I'm getting ready for tonight's Wrap--it shows an even more bullish possibility for the DOW to head up to 12500 area by early next week. As a bear, that's OK. The more it rallies the greater the profit potential on the next leg down. We just might need to bide our time for a bit more before getting that short entry. In the meantime, the trend is up so trade it that way--use the uptrend lines (NDX in particular). If you're already short, be aware of the rally potential. Maybe some good news from the Fed tomorrow? The bullish wave count here says yes. Link

Marc Eckelberry : 3/20/2007 3:19:38 PM

If you own GOOG, INTC, BRCM, NVDA, QCOM, CSCO you do not understand this rally in NQ. Where are my stocks, you are asking? Hedge funds buying futures without the stock, it is very weird indeed. The Yen bounce earlier is what started some selling, so keep an eye on it.

Jeff Bailey : 3/20/2007 3:19:21 PM

YM 12,368 ....

Jeff Bailey : 3/20/2007 3:18:54 PM

03:00 Internals found at this Link

Jane Fox : 3/20/2007 3:15:09 PM

The higher low made on March 14th has now been confirmed by a higher high today. Link

Keene Little : 3/20/2007 3:14:16 PM

The short term bullish counts on the DOW and SPX are looking more and more like a better possibility than the more immediately bearish wave count. Notice how the DOW found support at the top of the trend line along recent highs after it broke above it this morning. A rally up to the top of a parallel channel and some Fibs near 12400 could be in the works. Link

Jeff Bailey : 3/20/2007 3:13:52 PM

USD/JPY 117.30

Jeff Bailey : 3/20/2007 3:13:30 PM

Could be "gone" ... 12,378

Jeff Bailey : 3/20/2007 3:12:36 PM

YM 12,372 ...

Jane Fox : 3/20/2007 3:12:16 PM

SAN FRANCISCO (MarketWatch) -- Gold futures scored a fourth consecutive winning session Tuesday to close near their highest level in three weeks, underpinned by softness in the dollar as traders awaited Wednesday's Federal Reserve decision on interest rates.

"Gold appears intent on rebuilding from the damage it took from declining stock markets over recent weeks," said Jon Nadler, a metals analyst at Kitco.com.

"If there is enough momentum to the upside, as well as good buying on any interim lows, the conditions could be ripe for another try at the previous area of failure -- near $672," he said in e-mailed commentary.

Jane Fox : 3/20/2007 3:11:04 PM

John Backus, whose development of the Fortran programming language in the 1950s changed how people interacted with computers and paved the way for modern software, has died. He was 82.

Mr. Backus died Saturday in Ashland, Ore., according to International Business Machines Corp., where he spent his career.

Jane Fox : 3/20/2007 3:09:52 PM

The US $ is falling and is now testing Friday's lows. This should certainly help my Gold long.

Jeff Bailey : 3/20/2007 3:07:54 PM

USD/JPY 117.27

Jeff Bailey : 3/20/2007 3:07:36 PM

YM shorts stopped alert on both at 12,732

Keene Little : 3/20/2007 3:05:09 PM

I see the bulls stepped back in--just in time to save the day.

Jeff Bailey : 3/20/2007 3:01:55 PM

03:00 Market Watch found at this Link

Marc Eckelberry : 3/20/2007 2:50:38 PM

Wacky day. Bottom line: bulls need a close above 1787.75, week of March 4 high. They might still do it as that freak out selling seems to have abated. HGX is up, which means bulls think the worst is over in housing (right).

Jeff Bailey : 3/20/2007 2:42:49 PM

USD/JPY 117.11

Jeff Bailey : 3/20/2007 2:42:32 PM

Bugger REFUSES to see a 5-minute close below 12,351

Jeff Bailey : 3/20/2007 2:42:03 PM

YM 12,351 ... now 38.2% "dynamic"

Marc Eckelberry : 3/20/2007 2:41:53 PM

I tell you, it is just fine to be short NQ at 1786 going into the Feds. Weekly R1 is still king.

Marc Eckelberry : 3/20/2007 2:41:06 PM

They took out a bunch of stops, but May oil found support again at 50 dma, 59.30. That is sustaining YG above daily R2. Yes, gold is trading above r2 still.

Keene Little : 3/20/2007 2:37:30 PM

Bulls need to step back in now otherwise NDX is about to lose support after completing what could be a very clean 5-wave move inside its ascending wedge.

Jeff Bailey : 3/20/2007 2:32:58 PM

YM 12,358 ... DAILY R1.

Jeff Bailey : 3/20/2007 2:32:45 PM

USD/JPY comes back up to daily pivot 117.14. Session low juuust under WEEKLY Pivot at 116.92.

Marc Eckelberry : 3/20/2007 2:32:45 PM

inflation is up there so they cant really lower rates, but if they do, inflation risk increases while the dollar falls. Oh my God as my daughter would say.

Marc Eckelberry : 3/20/2007 2:31:29 PM

If the Feds raise rates, gold is dead. If they hint at lowering, with the CPI numbers, Gold will hit 670.

Jeff Bailey : 3/20/2007 2:30:25 PM

Today's "final hour" could be a hum-dinger.

Marc Eckelberry : 3/20/2007 2:29:41 PM

I spoke too soon. Who pulled the rug on everything?

Keene Little : 3/20/2007 2:29:37 PM

Hey Marc, I'm glad you and I will make a market all by ourselves. I'll be glad to sell you all the gold I can short :-)

Jeff Bailey : 3/20/2007 2:28:51 PM

YM 12,367 ... bumping 19.1% "dynamic", but DAILY R1 has held tough.

Jeff Bailey : 3/20/2007 2:28:19 PM

USD/JPY 117.09

Jeff Bailey : 3/20/2007 2:27:16 PM

Part of me (CAT/DOW) saying "Yes! Dollar weakness great for U.S. exports."

Jeff Bailey : 3/20/2007 2:26:04 PM

CAT +1.01%

SPY +0.35%

DOW +1.08%

VLO +1.23%

EWJ +0.89%

NDE +5.36%

LEND +19.88%

Marc Eckelberry : 3/20/2007 2:25:21 PM

Anyway, save yourself the hassle and heartaches and buy gold on pullbacks. Heck, even May oil at 59.30, 50 DMA was a buy. And the Yen, that one was a nice pick up last night.

Marc Eckelberry : 3/20/2007 2:23:03 PM

The lesson today was that volume did not accompany a break of resistance, at least QQQQ volume. Furthermore, key tech stocks like INTC, GOOG and BRCM and QCOM were in the red. It made no sense and now we are back below previous March highs and weekly R1. Also note that the advance was inch by inch, typical of a dying rally.

Jeff Bailey : 3/20/2007 2:22:46 PM

This is maddening ... YM 12,362 ... USD/JPY 117.06

Keene Little : 3/20/2007 2:17:04 PM

NDX is the closest to breaking below its ascending wedge but that's where this afternoon's pullback has found support (uptrend line from last Wednesday). Any break below 1760 could spell trouble. But I have a feeling this will be held up into FOMC. May not happen but I'd be a bit surprised if stronger selling started before tomorrow afternoon.

Bullishly, the wave pattern could be interpreted as preparing for a major move to the upside (with a strong break out above the ascending wedges). If that happens you'll only want to think about the long side for at least a couple of days.

Keene Little : 3/20/2007 2:11:58 PM

That's what I love about this business, Jane. The day I stop learning will be day I start looking for something else to do.

Jane Fox : 3/20/2007 2:10:44 PM

Me thinks the downdraft I was talking about earlier is now over.

Jane Fox : 3/20/2007 2:09:24 PM

You know what they say Keene, "It is a good day when you learn something." So a good day for both of us.

Jane Fox : 3/20/2007 2:07:00 PM

TICKS +800 You cannot hold a short for long when the AD line is +800.

Keene Little : 3/20/2007 2:08:10 PM

Thanks Jeff, I thought so as well. In fact your statement about being able to short an ETF on downticks reminded me that I read one of the dangers for the market this time around (if some hard selling starts) is that the multitude of ETFs could exacerbate the selling because of the ability to short on a downtick. With the 9000 some hedge funds out there heavily using ETFs, if they collectively start shorting the ETFs, and don't need an uptick first to do it, then selling could get wildly out of hand.

Also, thanks to Denise, specifically on gold:
Tell them to pick the best barometer of the gold stocks and do puts on that stock. i used to trade the XAU--the spread back then was so wide you could drive a truck thru it--but they can look at it.

And from Jamil:
I shorted GLD intra-day many times. As for SLV, never succeeded. They never had inventory!! But yes, ETFs are shortable.

We have a great reader base, thanks!

Jane Fox : 3/20/2007 2:04:39 PM

March 20 (Bloomberg) -- New Century Financial Corp., the second-biggest U.S. subprime mortgage lender, said Fannie Mae won't buy any more of its loans.

New Century also is no longer allowed to handle billing or collections on Fannie Mae mortgages, the Irvine, California-based company said in a federal filing. Fannie Mae, based in Washington, is the biggest source of money for U.S. home loans.

Jane Fox : 3/20/2007 2:02:33 PM

AD line hit a high of +1334 but has fallen to +898, which is still bullish. At times like this I usually just like to close any long positions. However, aggressive trades can short, just don't overstay your welcome.

Jeff Bailey : 3/20/2007 2:02:00 PM

Halliburton (HAL) $29.98 -7.40% ...

Jeff Bailey : 3/20/2007 2:01:38 PM

Valero (VLO) $61.06 +0.44% ...

Jeff Bailey : 3/20/2007 2:01:11 PM

Oil Service HOLDRs (OIH) 139.09 -2.35% ... backfilling Monday morning's gap higher.

Jeff Bailey : 3/20/2007 2:00:22 PM

My USD/JPY and equity weakness getting put to the BIG test intra-day here.

USD/JPY 116.99 with YM 12,358.

Jeff Bailey : 3/20/2007 1:58:12 PM

Yes ... and I think on downticks too.

Jeff Bailey : 3/20/2007 1:56:44 PM

USD/JPY losing prior session low. WEEKLY Pivot about to be tested 116.98.

Jeff Bailey : 3/20/2007 1:55:55 PM

YM short alert another one (1) at 12,351.

Jeff Bailey : 3/20/2007 1:55:24 PM

YM 12,352

Jeff Bailey : 3/20/2007 1:54:48 PM

Indymac (NDE) $28.95 +5.61% ... back to test WEEKLY Pivot after session high of $31.10.

Keene Little : 3/20/2007 1:50:06 PM

Thanks Jane, can any of the ETFs be shorted? Jeff, got any ideas? Shows you how little I know about these trading vehicles. I'm going to need to study these more since so many people are now trading them.

Keene Little : 3/20/2007 1:48:33 PM

If I get a little quiet at times from here it's because I'm working on tonight's Wrap. Jim is still feeling under the weather with the flu so I'll fill in for him. Keep an eye on those ascending wedges for NDX and RUT. We didn't get any over-throws so now I'm watching to see if we get a breakdown instead. Otherwise we could see that support hold and another press to a minor new high as we head into tomorrow.

Jeff Bailey : 3/20/2007 1:46:19 PM

YM short target still 12,330

Jane Fox : 3/20/2007 1:47:20 PM

Keene the gold and silver ETFs do not have options and as far as shorting I'm not sure.

Jeff Bailey : 3/20/2007 1:45:43 PM

YM short alert here at 12,360 , stop 12,372

Jeff Bailey : 3/20/2007 1:45:11 PM

YM short cancel setup alert with YM 12,362.

Keene Little : 3/20/2007 1:42:06 PM

What's the best option to buy on either gold or silver, since I don't trade futures??

Good question. I haven't checked into options on these. Maybe on GLD and SLV funds? Can you short them? I haven't played with any of the ETFs. Jane or anyone else have a good answer to this question?

Jeff Bailey : 3/20/2007 1:39:17 PM

YM short setup alert ... look to short the YM on a trade at 12,353. Stop will be tight at 12,364. Target 12,330.

Keene Little : 3/20/2007 1:38:59 PM

My bad on an earlier post about the short setup for gold and silver. I mentioned the price per tick on the silver e-mini (YI) and said $10 per tick. It's $1 per tick, $1000 per contract per $1 change in silver. I shorted this morning's bounce so if you joined me in that trade I'll keep updating how it's doing. For now the stop should be at a new high (I like to keep it away from overnight stop runs so I currently have it set at 13.60).

I liked the setup with the Fibs on silver and the fact that it bounced back up to its broken 50-dma (pink trend line on this daily chart) was icing on the cake. If I've got the wave count correct on this we should see another leg down to at least equal the first and that gives us 11.09 which would be about a $2500 profit on just one contract, using only $945 margin ($700 maintenance) with Interactive Brokers. It's one of the best return-on-margin trades out there. I'm using the SI contract for this chart as it shows a little more volume than YI: Link

Jeff Bailey : 3/20/2007 1:35:40 PM

USD/JPY 117.17 ... testing DAILY Pivot here.

Jeff Bailey : 3/20/2007 1:33:17 PM

USD/JPY 117.18

Jeff Bailey : 3/20/2007 1:33:01 PM

YM Long stopped alert 12,364

Jeff Bailey : 3/20/2007 1:30:21 PM

YM Long raise stop alert to 12,364

YM 12,368

Jeff Bailey : 3/20/2007 1:26:44 PM

YM long finger on the button alert ... 12,368

Jane Fox : 3/20/2007 1:20:10 PM

I see a top forming and we may get a downdraft from here. Not sure now long it will last but you may want to step aside for now if long.

Jeff Bailey : 3/20/2007 1:16:49 PM

USD/JPY 117.28 -0.19% ... thinking that USD better find an intra-day bid pretty quick.

YM 12,370 after near-test of DAILY R2

Keene Little : 3/20/2007 1:13:37 PM

Hey Keene how is the action looking from the fibonacci time frame you talked about last week. Could a diversion from that cause any question as to the outcome?

Great question Scott. The Fib time ratios that I show provide guidance for how long a "normal" move should take. For example I showed a 2nd wave correction typically taking 62% of the amount of time it took for the wave-1 decline. But as I say, that's a guide and helps me look for when a potential turn might occur, just as when price reaches a Fib price level. It doesn't mean it will turn there but only that it has the potential to turn there.

The current wave-2 correction, especially using the larger a-b-c bounce off the March 5th low, has exceeded that 62% time frame and the database shows a wide variation around that so it becomes less helpful now. It could take as much as 162% of the time for wave-1 (which would be mid day tomorrow, hmmm) and therefore I go to the wave pattern and price levels as my primary guidance now.

Missing that original time window did suggest something else might be happening and now that we see the correction extending into a larger a-b-c correction it turned out to be a good indicator. Now I'm watching for how the c-wave is progressing and interestingly the c-wave will achieve 162% of the time it took for wave-a (the first leg up off the March 5th low) at 1:30 today. So price and time could be coming together for a high today.

Jeff Bailey : 3/20/2007 1:13:31 PM

01:00 Internals found at this Link

Jeff Bailey : 3/20/2007 1:07:20 PM

Holy cow... NDE $30.94 +12.83% ...

Jeff Bailey : 3/20/2007 1:06:40 PM

YM Long raise stop alert ... to break even.

YM 12,376

Jeff Bailey : 3/20/2007 1:02:30 PM

01:00 Market Watch found at this Link

Jeff Bailey : 3/20/2007 1:00:16 PM

GLD darts into this morning's gap.

Keene Little : 3/20/2007 12:57:25 PM

The DOW and SPX still leave me guessing as to their short term patterns. They look more short term bullish than the RUT and NDX so it's a bit of a mixed picture between these indices. The current little pullback still looks corrective so as long as they continue to be then we should look for a press higher.

Keene Little : 3/20/2007 12:47:41 PM

I was asked this morning for some specific trade recommendations so here's one--GOOG could be worth nibbling on a few puts. It has to work quickly so even buying front month (April) slightly OTM could be a good play. If that stock doesn't quickly get back above 450 (I'd use a stop around 455) then the bearish wave pattern calls for a very fast decline very soon. Dropping below 400 in a heartbeat is what I see coming, from a bearish perspective. It seems like a good spot for a high profit/low risk (tight stop) setup.

Jeff Bailey : 3/20/2007 12:46:03 PM

YM Long raise stop alert ... to 12,354.

YM 12,368.

Keene Little : 3/20/2007 12:41:04 PM

No decision yet on GOOG since it's just consolidating and hasn't moved through either of the bullish or bearish key price levels. The bearish thing I currently see is its inability to get back above its broken uptrend line from August 2004. It tested it twice in the past week, including yesterday near 448 but hasn't been able to get back above it. I can't say I like the long side on this stock. Link

Marc Eckelberry : 3/20/2007 12:39:14 PM

QQQQ volume is light. INTC, GOOG and BRCM not in the party. This is more like a short covering rally, but NQ did move up above 1787.75, previous March high. COMP is way above 2400 and bulls are feeling happy and comfy, once again. Upside risk is to 50 DMA

Keene Little : 3/20/2007 12:35:25 PM

NDX has a very similar pattern to the RUT chart I just posted. It too could be forming an ascending wedge for wave-c in an a-b-c correction to the decline from the February high. If so it could be very close to completing it. The top of its wedge is near 1772 so any throw-over followed by a drop back inside the wedge would be a sell signal. A drop below the bottom of the wedge, currently near 1761 would be another sell signal, with confirmation by a break below its last low near 1752. Link

Upside Fib potential remains near 1790 and any push above that level would say we've got something more bullish than just a correction to the decline happening here. Until that happens I'm leaning to the short side on this bounce.

Jeff Bailey : 3/20/2007 12:32:55 PM

Broker/Dealer (XBD.X) alert! 233.271 +1.03% ... See Monday's Market Wrap

Jeff Bailey : 3/20/2007 12:26:00 PM

YM long alert here at 12,361. Stop 12,339 and target to 12,395.

Keene Little : 3/20/2007 12:20:25 PM

Things could get interesting from here when I look at the RUT's chart. I've changed the bearish wave count since yesterday's update where I showed the current bounce as a smaller degree 2nd wave correction (as per yesterday's chart: Link ). I think now that the bounce off the low on March 14th is wave-c of a larger a-b-c correction to the decline off the February high. It's possible this c-wave is forming a small ascending wedge (common for c-waves) and if so then it's nearing its completion, as shown on this updated chart: Link

A small throw-over above the top of the wedge would say watch for failure below 795. If we see a throw-over followed by a drop back below 792 then we'd have a sell signal. A drop below its uptrend line near 788, with a confirmation by a drop below 785, would be immediately bearish. But until we get that signal there's still upside Fib potential to the 803-804 area.

Keene Little : 3/20/2007 12:07:45 PM

SPX is about to test its previous highs near 1410 so watch for a pullback (or acceleration higher if stops start getting hit).

Jeff Bailey : 3/20/2007 11:53:54 AM

VIX.X 14.14 -3.08% ... has slipped back below MONTHLY Pivot.

Keene Little : 3/20/2007 11:50:29 AM

Getting back to gold, the daily chart is an update to the one I've shown recently. The current bounce should be a great setup for a short play since the next leg down, like for equities, and assuming we get it, will be a fast sell off. Link

Looking a little closer, the 120-min chart shows why I think the bounce will fail at or near 662-663. Two equal legs up in its a-b-c bounce off the low on March 5th (again, just like equities) is at 662.20. A 50% retracement of the drop from February 27th (hmm, like equities) is at 663.80. To me this is a pound-the-table short play if I ever saw one. And I don't pound the table very often. Link

I don't show it but silver is exactly the same setup. YI is the e-mini and has a low margin requirement with high profit potential. It trades $1000 per $1 change in silver ($10 per 0.001 tick) so it can also get you into trouble quick (watch out for the overnight trading) but I like trading this one.

Jeff Bailey : 3/20/2007 11:49:34 AM

Indymac (NDE) $28.85 +5.21% ... testing WEEKLY Pivot $28.82. Stock has seen selling at WEEKLY Pivots last two weeks. A CLOSE above will have me reassessing long put (NDE-QE) position.

Jane Fox : 3/20/2007 11:44:54 AM

TICKS +1000. Hopefully you are not short.

Jeff Bailey : 3/20/2007 11:45:39 AM

US Oil Fund (AMEX:USO) $48.53 -0.34% ... March's MONTHLY Pivot Levels are $45.77, $48.48, Piv= $50.00, $52.71, $54.23.

WEEKLY Pivot Levels are ... $46.39, $47.37 (overlaps with MONTHLY 19.1%), Piv= $48.76, $49.73, $51.12.

Jane Fox : 3/20/2007 11:42:35 AM

Crude cannot seem to break the 200EMA resistance but is gearing up to take another run at it. Link

Keene Little : 3/20/2007 11:35:32 AM

I added a trend line along the recent highs for the DOW to show how and why price could fail here. Again, stay cautious if you're trying the long side. Link

Jane Fox : 3/20/2007 11:32:12 AM

Consolidating at daily highs tells me the odds are that it will resolve higher.

Marc Eckelberry : 3/20/2007 11:28:51 AM

If short, stops should be tight here because we do have that NDX gap at 1800. Never underestimate the bulls. Weekly R2 is NQ 1808.

Keene Little : 3/20/2007 11:25:41 AM

Finally getting a little push higher. Now is when the bulls need to be a little more careful. If you look at the past few times we've seen a minor push higher out of congestion it has failed miserably and was followed by some very fast selling. The bearish wave pattern is set up for a strong decline so now is the time to start worrying about a downside surprise if you're long.

I don't think much if anything will happen before FOMC but stay on your toes. As I said before, any effort by the market to rally into FOMC could end up being a nice short play but I won't have a better feel for that until we get closer tomorrow. Right now the market just feels listless and on hold.

Marc Eckelberry : 3/20/2007 11:25:24 AM

That's just the way I trade. I look for at trades that will get me at least $200-300 per contract, otherwise find another job.

Jeff Bailey : 3/20/2007 11:24:40 AM

Brocade Communications (BRCD) $10.12 +2.32% Link ... notable 52-weeker at the NASDAQ. Testing bearish resistance today.

Marc Eckelberry : 3/20/2007 11:23:43 AM

I guess I have a lot of disagreements today. I think one should get short at resistance before the Feds if there was a two or three day rally.. Any rally that keeps going up before such an event is usually a good short. You end up with a cushion because invariably, stocks retreat just before the news. You can then lower your stop to even and let the other traders get whipped. I would do the same trade the other way around, buy a sell-off before. The trick is to find the top or low. That is why I use weekly R1 or S1.

Jeff Bailey : 3/20/2007 11:20:13 AM

11:00 Internals found at this Link

Marc Eckelberry : 3/20/2007 11:18:58 AM

NQ 1787 was 20 DMA. With Yen rise, I doubt we get over that by much. Weekly R1 is 1786.25, it's a good short, but the stop should be no higher than 1791.

Jane Fox : 3/20/2007 11:12:12 AM

BOSTON (MarketWatch) -- The trouble in the mortgage market could spread beyond the subprime sector with tighter lending standards cutting demand for new homes by as much as 15% and further squeezing home-builder profits, according to an analyst following the industry.

"We expect lending standards to tighten further, based on our expectation of further [home] price declines in 2007," wrote Banc of America Securities analyst Daniel Oppenheim in a Tuesday report. The analyst lowered his stock-price targets for the home-builder group by 15%, and also cut his profit estimates for several companies.

Marc Eckelberry : 3/20/2007 11:04:39 AM

Watch the Yen.

Jeff Bailey : 3/20/2007 11:02:24 AM

11:00 Market Watch found at this Link

Jeff Bailey : 3/20/2007 10:59:15 AM

CHINA BOHAI BANK GETS OK TO HOLD DOLLAR SHORT POSITION

DJ- Chinese bank receives regulatory approval to be net negative on its U.S. dollar positions daily, becoming the first bank in the country to be allowed such flexibility in its foreign exchange trading positions.

Keene Little : 3/20/2007 10:54:00 AM

Thanks Jane, I see what you're doing with those numbers. It still seems to me to be a position trading tool rather than playing the squiggles during the day. Maybe I'm still missing something.

Jeff Bailey : 3/20/2007 10:53:41 AM

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

Jane Fox : 3/20/2007 10:51:56 AM

AD line to new daily highs and VIX to new daily lows. So all is well in bull country.

Keene Little : 3/20/2007 10:48:19 AM

I assume by your comments below you are assuming any rally on the FED news would just end up being a better short with a higher entry. So I assume you wouldn't get short before the meeting.

Ray, yes, any rally post-FOMC would just make for a higher short entry. It could take a couple of days to run higher but once it completes we should see another leg down to at least match the one from the February high, and just as fast. But that's if we get the rally post-FOMC. If we rally into FOMC then we're likely to get a sell-the-news event. I'll be watching to see how the pattern is setting up into tomorrow afternoon as to which way I think it will resolve.

Generally speaking I prefer to be flat over the FOMC announcement, at least as far as futures trading goes. Too risky in my opinion. I could be right in the eventual direction but it doesn't mean the market can't whip about severely and frankly I don't have the stomach for that. The days of fast planes and loose women (don't tell my wife I called her a loose woman) are behind me. A couple of lottery options is another story.

Jane Fox : 3/20/2007 10:47:53 AM

BTW those are dashes in front of the points I have opposite each timeframe and not minus signs.

Jane Fox : 3/20/2007 10:42:11 AM

I did not show the yearly on my 5 minute chart because it is way off the chart at 805.50 so until we get back to that number the highest number ER can trade at is +9.

Keene Little : 3/20/2007 10:40:26 AM

Thanks Jane. In the meantime I'm getting the feeling that the DOW could march sideways over to its uptrend line from last Wednesday. We've recently seen these consolidations following a rally suddenly fall out of bed so the bearish wave count on this chart is still alive. But the odds continue to point to a higher resolution which is shown by the green bullish wave count. This one suggests a rally up near 12500 before the correction to the decline from February will be complete. Link

Jane Fox : 3/20/2007 10:40:20 AM

Keene take a look at these charts and tell me if it makes sense to you. If I have confused you then I probably have confused a bunch. Link

Jeff Bailey : 3/20/2007 10:38:41 AM

Swing trade establish stop alert for the two (2) QFW-PU at $2.10 for the options.

Jane Fox : 3/20/2007 10:33:04 AM

Keene I will put together a workspace and show it all.

Jane Fox : 3/20/2007 10:32:45 AM

Of course then I always take into consideration the PDR and as you can see ES is bumping up against its PDH now and cannot seem to get through.

Keene Little : 3/20/2007 10:32:04 AM

Jane, you'll have to explain a little more about that little system of yours. I'm not sure what you're assigning the numbers to when you say you use the opening prices of the various time frames. How using the longer term opening prices to make trades on a 5-min chart has me baffled.

Jeff Bailey : 3/20/2007 10:31:49 AM

LEND's Option Montage today Link

Option Montage from 03/15/07 Link

Jane Fox : 3/20/2007 10:29:59 AM

ES's daily open is 1414 so above 1414 it is +9 and below it is +5 and not a time to be trading.

Jane Fox : 3/20/2007 10:24:08 AM

Then again TRIN is making new daily highs but at 1.01 I am not puttin a lot of emphasis on it. Actually I don't put a lot of emphasis on the TRIN unless it is at extremes.

Jeff Bailey : 3/20/2007 10:22:34 AM

LEND $11.34 +26.70% ...

Jane Fox : 3/20/2007 10:22:33 AM

... however, the AD line at +326 is not giving the bulls a lot of warm and fuzzies.

Jeff Bailey : 3/20/2007 10:22:06 AM

Swing trade sell NAKED put alert ... Let's sell two (2) of the Accredited Home Lenders LEND April $7.50 Puts (QFW-PU) at the bid of $1.05.

Jane Fox : 3/20/2007 10:21:29 AM

Right now ER is at +9 so you want to be long using your own system of entry.

Jane Fox : 3/20/2007 10:20:24 AM

Keene I use the system on a 5 minute chart. It just helps me to know which side of the market to be on, long or short. I mostly use it to confirm the internals.

Jeff Bailey : 3/20/2007 10:18:33 AM

Accredited Home Lenders (LEND) $11.25 +25.69% ... Not to bad of a deal for Farallon. Take note of th 3.3 million warrants with an exercise price of $10.00.

Watch that $10.00 level going forward. If LEND were to break much under that level, I would think Farallon would be shorting against those warrants. Maybe they are doing some today. However, $10.00 is a level that new, or current shorts will see as support, as will new bulls.

Keene Little : 3/20/2007 10:17:43 AM

What do you think about some puts on LEND after the quick run-up today?? Too dangerous??? Your thoughts?

Anthony, I haven't looked at the subprime lenders carefully enough to make a trading call on them. My feeling about that market is that most, if not all, of the subprime lenders will be toast before the year is out. Therefore I'd look at any bounce in this market, including prime lenders, as a shorting opportunity. The question is how high the bounce will get to.

Jane Fox : 3/20/2007 10:15:20 AM


Jane Fox : 3/20/2007 10:13:47 AM

I have found the internals will usually support a +/- 8 or 9. For instance yesterday ER traded all day at +9 (only below the yearly open) and the internals remained bullish all day. Today the internals are nondirectional and the ER number is a nondirectional +6.

Jeff Bailey : 3/20/2007 10:13:38 AM

Accredited shares up on new financing deal ... Reuters Story Link

Keene Little : 3/20/2007 10:12:41 AM

Jane, I'm assuming that system is designed for position trading?

Jane Fox : 3/20/2007 10:11:06 AM

At the futures seminar I attended in Las Vegas last fall I found a really neat way of figuring when to be long and when to be short. You take the daily, weekly, monthly and yearly open and assign a number to it: daily - 4; weekly - 3; monthly - 2 and yearly - 1. You go long when your number is +7 or above and short when your number is -7 or below. ER is right now trading at +6 so I am on the sidelines.

Jane Fox : 3/20/2007 10:10:16 AM

TICKS +1000

Jane Fox : 3/20/2007 10:05:59 AM

I will try long positions in the Russell 2000 market above 793.30 and I will be short below 789.60. Unfortunately ER is now a 792.30, right in the middle so I am not trading.

Jeff Bailey : 3/20/2007 10:05:15 AM

China's Zhou: Central Bank Doesn't Inted To Build More Reserves

DJ- China's Central Bank Governor Zhou Xiaochuan said the country's monetary authority doesn't "intend to go further and accumulate (foreign) reserves."

In an interview with the EmergingMarkets daily, Zhou was quoted further as saying "many people say that foreign exchange reserves in China are (already) large enough."

China's foreign exchange reserves totaled $1.066 trillion at the end of 2006, and are rising around $20 billion a month.

Zhou was in Guatemala's capital for the annual Inter-American Development Bank meeting.

Zhou said Chinese authorities would "cut a small piece" of the central bank's international reserves for a new foreign exchange management agency that will seek to invest the money for profit, shifting the focus away from building a financial cushion, EmergingMarkets reported.

The foreign exchange management agency will also seek to drain excess liquidity. It will be set up by the central bank and the finance ministry, and begin operating this year.

Zhou called it an "experimental" agency that could incorporate structural elements from state investment organizations such as Singapore's Temasek Holdings and Government Investment Corp.; the Korean Investment Corporation; Norway's Central Bank; the Kuwait Investment Authority; the Saudi Arabian Monetary Authority.

Jane Fox : 3/20/2007 10:02:52 AM

The link that Keene mentioned in his 9:58 post works very well.

Jane Fox : 3/20/2007 10:02:25 AM

I was having problems with the MM last night and tech support had me flush my DNS server. Not a hard thing to do but you need to use the CMD command and get to a DOS window. If you want, send me an email and I will help you walk through it. jbfox@charter.net

Jeff Bailey : 3/20/2007 10:01:51 AM

10:00 Market Watch found at this Link

Keene Little : 3/20/2007 9:58:34 AM

I received one email this morning saying he couldn't get into the Market Monitor. I thought the problem was fixed but let me know if anyone else is having trouble still with the standalone version. As an alternative to the standalone version I received this update from support:

Tech support has created a new website version of the Market Monitor, but unfortunately it is not yet up on the site. It's a pop-up version that auto-refreshes every 30 seconds. The good news is, you can use this link in the meantime to access our auto-refresh trial version: Link

Make sure you are first logged in to the website before clicking on this link. Please let us know if you have any further questions--email us at support@Optioninvestor.com

Remember, if your emails keep getting blocked by OI, get another email address such as gmail and that should help you communicate with support.

Jeff Bailey : 3/20/2007 9:56:44 AM

Dow Jones Home Construction (DJUSHB) 627.66 +0.88% ... also down 29.03% versus a year ago.

Jane Fox : 3/20/2007 9:55:45 AM

Ad line as "improved" to +297. Still no time to be trading.

Jane Fox : 3/20/2007 9:43:58 AM

ER is now testing its overnight lows. They may hold for now because the other markets are not testing their overnight lows. In any case, this is not a time for trading.

Keene Little : 3/20/2007 9:43:49 AM

Not exactly a ball of fire out of the equity markets this morning. The bonds have rallied big this morning so apparently they're thinking the Fed could soften its hawkish stance on interest rates. If the Fed even hints as much then we'll likely see the stock market blast off. It should be short lived but it could be a painful ride for any bears who are short at the time.

Jane Fox : 3/20/2007 9:35:55 AM

VIX open within its PDR and the TRIN at 0.76 so these two are not giving any bearish hints.

Jane Fox : 3/20/2007 9:34:05 AM

AD line is -348 and AD volume is basically 0.

Marc Eckelberry : 3/20/2007 9:31:01 AM

Everyone was bearish on gold back then 9October) and I read last week from Mark Hulbert that everyone turned bearish on gold again. Now there are quite a few out there that have turned bullish, especially European analysts ( I only listen to them) pushing it to their clients. They are correct. Sell stocks, buy gold and Yen.

Keene Little : 3/20/2007 9:28:30 AM

The futures got a nice pop, but the initial enthusiasm has worn off. I guess they finally concluded, "Uh oh, I guess that means the Fed won't be cutting rates any time soon (as if they were ever thinking about it)". Building permits, which are much more meaningful measurement of activity, were down 2.8% in February and were down over 28% from a year ago.

Thanks John, I agree with your comment. In last Wednesday's Wrap I discussed the home builders index and how it looked ready for a bounce to retrace a portion of its drop from its February high. I thought we'd start hearing some "good" news that will get people once again thinking the bottom is in and it looks like we could get the bounce. And if we do see it bounce, especially if it can get back up to its broken uptrend line (bottom of its bear flag) near 690, then I think it will make for an outstanding short play. Link

Marc Eckelberry : 3/20/2007 9:26:31 AM

I also think NQ hit a wall at weekly R1 (1786) which is also 20 DMA, ahead of the Feds. I might be wrong on that one, much riskier than a gold call, but that is the way I'm playing it.

Marc Eckelberry : 3/20/2007 9:25:02 AM

And where we have been (690).

Marc Eckelberry : 3/20/2007 9:24:51 AM

I remember telling readers to not nickel and dime an entry back then, that they would look back and wonder why they quibbled over buying at 570 or 580 or even 590. Look where we are now.

Marc Eckelberry : 3/20/2007 9:23:27 AM

...I think you said that at 575, Keene...:)

Marc Eckelberry : 3/20/2007 9:22:51 AM

Gold is headed for a test of all time highs at 850 or so and in real dollars that would be over 1000. There is nothing better than that instrument going into the problems we will face soon.

Jane Fox : 3/20/2007 9:22:44 AM

Keene, it looks like we have another cup of Java on the line. I really like Sumatra!

Keene Little : 3/20/2007 9:22:23 AM

Well Marc, you'll have a chance to buy it there again (wink). In fact you might have an even better opportunity to buy it at 500 (wink wink).

Jane Fox : 3/20/2007 9:20:46 AM

I was asked by subscriber Regan what my thoughts were on VLO, Valero Energy. This is a bullish chart Regan and just on it own merits I think a very good buy. The red arrow was a swing high back on February 26th and price once again tested that level as support on March 16th. This is your classic resistance turned support. MACD is also bouncing along giving no hints of weakness. Of course a better place to have bought this stock would have been when it tested the MA crossover on March 5th which was also what candlesticker's call an island.

The only caveat is that this stock will succumb to pressure from the price of Oil but since I am bullish on Oil then I guess that should be OK. Link

Marc Eckelberry : 3/20/2007 9:20:35 AM

That's ok Keene, I have been met with disbelievers ever since I suggested buying in October at 575 ... :)

Keene Little : 3/20/2007 9:17:51 AM

I agree with Jane about the equity market looking like it will resolve higher today. If it chops its way higher though, instead of another sharp rally, I think we could see it pretty much go into hold mode while the market waits for the FOMC announcement tomorrow.

But on gold I disagree--it looks like it's setting up for a swan dive. A little higher and then it should tip over into some fast selling. Same with silver and that one could make for an even better short play (low margin, high profit potential). I'll update my gold chart to show how I think it will play out very soon.

Jane Fox : 3/20/2007 9:09:35 AM

I will probably buy another GLD position again today and give this another try. I think the resistance will break. Link

Jane Fox : 3/20/2007 9:07:44 AM

NEW YORK (MarketWatch) -- Gold futures rose Tuesday, showing little reaction to U.S. housing starts data, though gains were capped by caution ahead of Wednesday's Federal Reserve decision on interest rates.

Gold for April delivery gained $2.20 at $656.50 an ounce on the New York Mercantile Exchange. On Monday, gold rose 40 cents to close at $654.30 an ounce, its strongest level since March 8.

The Federal Open Market Committee, the Fed's policy-setting panel, starts its two-day policy meeting on Tuesday. The Fed is widely expected to keep monetary policy on hold for the sixth consecutive meeting, maintaining its federal funds rate target at 5.25%. The Fed will announce its decision at 2:15 p.m. Eastern on Wednesday.

"Again the market remains in wait-and-see mode as traders look for the Fed's interest rate decision," said James Moore, analyst at TheBullionDesk.com. Link

Jane Fox : 3/20/2007 9:02:31 AM

The overnight session was starting to weaken and consolidate at overnight lows; that is until the housing data was released at 8:30. This report was all that was needed for the bulls to wake up and move the markets back to test overnight highs. I believe the consolidation we saw later in the day yesterday and overnight will resolve higher intraday. Of course, I will be watching the internals to confirm that expectation. Link

Marc Eckelberry : 3/20/2007 9:02:12 AM

The housing headlines were deceptive and some bought into it but futures are now retreating. NQ weekly R1 at 1786 is holding as R. Gold has now officially broken out to the upside, enjoy the ride to 750.

Jane Fox : 3/20/2007 8:54:30 AM

WASHINGTON (MarketWatch) -- With the financial markets thrashing wildly about over the past three weeks, the Federal Open Market Committee finds itself in the position of potentially throwing investors a life preserver, economists said.

This could come in the form of a subtle signal that the Federal Reserve's policy-setting panel is more open to the idea of cutting short-term interest rates in coming months, if economic conditions warrant.

Such a signal may not be audible for the average Joe but would prick the super-sensitive ears of Fed watchers, some economists believe.

"It will not be an obvious shift," said Richard DeKaser, chief economist for National City Bank. However, it should prove sufficient to provide some optimism for those looking for a shift in the Fed's hawkish stance, he said.

At the moment, the FOMC -- which convenes to review economic conditions, monetary policy and interest rates on March 20 and 21 -- has an inflation bias.

Jane Fox : 3/20/2007 8:49:57 AM

WASHINGTON (MarketWatch) - Groundbreaking on new homes rebounded by 9% in February after a 14% decline in January, the Commerce Department reported Tuesday.

Housing starts were up 9% to a seasonally adjusted annual rate of 1.525 million in February from a revised 10-year low of 1.399 million in January, beating the expectations for a smaller increase to 1.46 million. Starts are down 28.5% compared with February 2006.

Economists warn that the housing starts data are very volatile month-to-month and are sensitive to local weather conditions. In much of the nation, the weather turned cold and wet in the second half of January and into February after a very mild November and December.

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