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Keene Little : 3/23/2007 1:27:44 AM

With price moving sideways on Thursday, and an expectation that it will continue to do so at least for the morning, here are the 4 indices with their parallel up-channels. I am expecting another leg up after this consolidation and that should be the last one before we get at least a pullback (more bearishly we'll start the next hard decline). Here are the 60-min chart updates:
DOW: Link
SPX: Link
NDX: Link
RUT: Link

CME and GOOG have been doing their own thing so we'll need to watch their key levels to see which way they'll be heading next.
CME 120-min: Link
GOOG 120-min: Link

Keene Little : 3/23/2007 12:42:13 AM

Friday's pivot tables: Link and Link

OI Technical Staff : 3/22/2007 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The Market Monitor has been archived.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 : 3/22/2007 8:17:18 PM

Army was leaving the battle field not long after 12:11:12 ... ;)

Some were grinning at TRIN 4.71. Link

Jeff Bailey : 3/22/2007 8:14:17 PM

HSBC Holdings (HBC) closes $88.14 today. Up a bit from 02/27/07 12:06:08 benchmark.

Jeff Bailey : 3/22/2007 8:07:47 PM

US Oil Fund (USO) still off its 02/27/07 12:04:55 PM benchmark of $51.28.

Jeff Bailey : 3/22/2007 8:06:46 PM

Citigroup (C) closes $51.84 today.

Novastar (NFI) closes $6.26 today.

Jeff Bailey : 3/22/2007 8:04:54 PM

Good gravy! My how things change, but some stay the same.

CAT-HM were $4.80 x $4.95.

Hmmmmm.... what about a roll to $72.50? Or just close out the CAT-DN.

Jeff Bailey : 3/22/2007 7:55:55 PM

Went back and looked at the CAT-DN trade (02/27/007 12:19:18 PM)

CAT was trading $65.48 and VIX.X was 13.43

Proverbial "double edged sword" today with CAT rising, but so was VIX.X.

If given the chance, I'd gladly buy back the CAT-DN for $0.10.

Ditto for the VLO-PY.

Jeff Bailey : 3/22/2007 7:46:11 PM

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

Bought back the QFW-PU.

New stop on the VLO-PY

Jeff Bailey : 3/22/2007 7:25:11 PM

Relative Strength Chart of Continuous Gasoline ($GASO) vs. Continuous Oil ($WTIC) 0.25-point box chart Link

For those that may not be following much of the news in the refining industry, many refiners have shut down some of their capacity for switch to summer fuels, mainly unleaded gasoline. They should be coming back online in not-to-distant future.

That should (looking forward statement) have demand for crude oil starting to build, yes, months ahead of the summer driving season.

I'm going to be out of the office during April's option expiration.

With oil showing a little strength, and the RS chart of $GASO:$WTIC showing some resistance at 33.50 measure, and showing a "sell signal" on the RS chart, I'd just as soon play it safe. I'd hate to go on vacation should VLO slip back toward 50% retracement (04/24/05 high close to 09/25/06 low close) and leave some traders twisting in the wind.

Jeff Bailey : 3/22/2007 7:08:52 PM

Swing trade NAKED Put establish/change stop alert ... Please establish a stop of $0.35 for the two (2) Valero Energy VLO Apr $57.50 Puts (VLO-PY) at $0.35/contract.

Cancel any open orders for a stop on these options based on VLO trading $54.50.

Jeff Bailey : 3/22/2007 6:59:16 PM

Kraft Foods (KFT) alert! $31.85 +1.59% ... Being added to S&P 500

Jeff Bailey : 3/22/2007 6:53:11 PM

Closing Internals found at this Link

Jeff Bailey : 3/22/2007 6:26:41 PM

Not getting access to NYMEX's official settlements.

QCharts' looks as if May Crude Oil (cl07k) settled up $2.08, or +3.49% at $61.69.

Jeff Bailey : 3/22/2007 6:09:48 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 3/22/2007 5:52:28 PM

Simon Property Group (SPG) $113.85 +0.03% Link ... heaviest weighting for both the ICF and IYR.

Hmmm... as long as it doesn't trade $116, it currently has a BEARish vertical count of $90 already established.

Risking $2 to potentially make $23.85.

Jeff Bailey : 3/22/2007 5:44:22 PM

One potential problem for bears right now is Link

Jeff Bailey : 3/22/2007 5:41:51 PM

iShares Cohen & Steers Realty Index (ICF) PnF chart from Dorsey/Wright. I've doctored it up a little, show how the bullish vertical count is identified and established. Quick review of SECTOR status.

Do the technicals confirm the scenario? Link

Perhaps. The ICF did achieve and exceed its bullish vertical count. Perhaps the very day the ICF traded $85 in July'06 and built the column of X to $89, the MARKET knew where this security was headed.

Now that it has "gotten there" the risk for a SHORT is anywhere from infinity, to an identifiable $118. If you shorted some new highs the past year, you've probably "learned" it isn't always the best idea. Anyway, RISK can be assessed as $12.

I'll set an al_rt at $99. One of my favorite breakfast joints closed their doors about 6 months ago because landlord raised their rent. I was surprised that they closed, but as profitable as business was, the increase in rent couldn't be justified. Building was still vacant last time I drove by.

The bearish vertical count? That will be a little "tricky" for those learning the PnF system of RISK/REWARD. It is very similar to how th bullish vertical count is calculated. WHEN the ICF does give a "sell signal" we would count the number of O's. But then we multiply by 2. The trick part is the box size and it will need to be done it two parts. See... IF the ICF were to reverse from current $106, and then trade $99, we'd have two box size increments. We'd have 3 "O"'s to $100 on a 2-point box, then we'd have 1 "O" on the 1-point box size.

We'd have to do this

((3*2)*2-point box size = $12

Then ... ((1*2)*1-point box size = $2.

Then we'd take the (12 + 2) to get $14.

Then we'd go to the top column of "O" (assuming $104) where the assumed sell signal column was generated, and subtract $14 from it. That would give an assumed and preliminary BEARISH vertical count to $104 - 14 = $90.

Hmmm... maybe its CHEAPER to BUY than RENT?


Jeff Bailey : 3/22/2007 4:44:04 PM

Where StockCharts ICF chart gets "messed up" on the bullish vertical count (because they lower historical prices each time a dividend is distributed) is back in May'06.

Jeff Bailey : 3/22/2007 4:38:49 PM

Interesting .... Dorsey's bullish vergical count on ICF from that triple top buy signal back in July of last year at $85 was to $106.

Jeff Bailey : 3/22/2007 4:36:09 PM

Pretty close match on Dorsey's ICF and StockCharts'

Jeff Bailey : 3/22/2007 4:31:16 PM

iShares Dow Jones U.S. Real Estate Index Fund (AMEX:IYR) $87.75 -0.07% Link ... fact sheet Link

I'll check the PnF chart against Dorsey/Wrights'. IYR probably a high dividend payer.

Jeff Bailey : 3/22/2007 4:28:00 PM

iShares Cohen & Steers Realty Majors Index (AMEX:ICF) $106.11 -0.25% Link ... fact sheet Link

I'll check the PnF chart against Dorsey/Wrights'. ICF probably a high dividend payer.

Jeff Bailey : 3/22/2007 4:22:36 PM

Speaking of commercial property ... Here in Denver, CO metro area, I've been seeing more and more mom & pop restaurants and various service-related businesses not where they used to be.

Channel checks that I've made have landlords RAISING rents.

Checks with one of my industry contacts confirms, saying that landlords may be pricing themselves out of the market.

Jeff Bailey : 3/22/2007 4:18:04 PM

Nike (NKE) $108.60 -0.22% ... "pops" to $110.40 on headline numbers.

Jane Fox : 3/22/2007 4:12:09 PM

It was a throw away day and to be expected after the huge gains we saw yesterday although quite bullish and I think we are headed higher.

Keene Little : 3/22/2007 4:10:43 PM

There's no appreciable change to the 60-min charts on the indices and stocks I posted today. I'll get them updated and posted tonight so that they're available for tomorrow's trading. Enjoy the rest of your day.

Jeff Bailey : 3/22/2007 4:09:30 PM

US Senate Panel Votes To Set March 2008 As Goal For Iraq Pullout

Jeff Bailey : 3/22/2007 4:06:15 PM

Ontario Budget Sees fy06-07 Surplus At C$310M

Jeff Bailey : 3/22/2007 4:05:03 PM

Jabil Circuit (JBL) $24.93 -4.11% ... darts lower to $23.71 on headline numbers.

Jeff Bailey : 3/22/2007 4:02:41 PM

Palm (PALM) $17.74 -8.79% ... "pops" to $18.10 on headline numbers.

Keene Little : 3/22/2007 4:01:27 PM

If gold and stocks head lower what will bonds do - short term?

I'm not sure the usual intermarket relationships are working, or will work, in the short term so this is a tough question. I've been going off each chart individually, with an eye on the other markets, to try to judge the next moves. For example, over the past few weeks I thought that both the US dollar and gold would drop but I was worried that I was wrong on at least one of them since they're usually counter cyclical. Now that I see the dollar at a point where it could get a bounce, that lines up with my thinking gold is ready to tip back over.

So, as far as bonds and gold, I'm not sure an intermarket relationship exists there except as relates to worries about inflation. If inflation is a problem normally bonds will stay low since inflation is not good for bonds. People will run to gold in an inflationary environment so a bond decline would support a rally in gold. Once again it would appear I'm wrong about at least one of these.

But as I've said, in an environment where all asset classes get sold, this intermarket relationship may not hold up in the short term. Follow each chart and at least you know where your entry and exit points are. Keep an eye on other markets but trade the chart your with (sung to the tune for "love the one you're with").

Jeff Bailey : 3/22/2007 3:58:19 PM

YM 12,550

Jeff Bailey : 3/22/2007 3:50:21 PM

Still kind'a like the buy, run, write for the TLT, but it does tie up some capital when buying the underlying.

Keene Little : 3/22/2007 3:50:09 PM

Heading into the close and we've got the DOW up 3 points and SPX down a point. The RUT is flat and the Nasdaq has been "clobbered", down 5 points. Yep, a real exciting day in the market. It was a good day to catch up on some reading and emails.

Jeff Bailey : 3/22/2007 3:43:40 PM

iShares Lehman 20-year (AMEX:TLT) $89.01 -0.82% ... maybe some NAKED puts this time around?

Keene Little : 3/22/2007 3:43:15 PM

I have two houses for sale - one in Virginia and one in Naples. ZERO action on either and I am the best priced in both markets. Buyers strike. Now what is the ripple effect of that - there was a new gourmet grocery going in (Fresh market) - builder over ran time and they canceled. Change in housing growth will toll through commercial also and we have not seen that reported. Dave

I haven't talked about the commercial side either Dave. I think you're exactly right--that's often where we see the effects of credit tightening first. And any softening in the economy will get business people pulling in their horns before they commit capital to new projects. That's why I say the Fed will soon be pushing on a string if they think they can stimulate demand with lower interest rates. Highly unlikely to work this time.

Jeff Bailey : 3/22/2007 3:40:47 PM

Today I "anticipated" the move below 1.00.

Trin was 1.00 when I went long the YM, ticked 0.97, several times today, but that has been it.

TRIN 1.21 now

Jeff Bailey : 3/22/2007 3:39:13 PM

TRIN 1.19 ...

Jeff Bailey : 3/22/2007 3:38:04 PM

YM 12,535 ... 50% dynamic. Just didn't think bulls would let it slide to 38.2% (12,526) into the close.

Jane Fox : 3/22/2007 3:34:43 PM

A couple of days ago Regan asked for my opinion on VLO and I thought the chart looked bullish. Gads I should have taken a long position. Link

Jeff Bailey : 3/22/2007 3:33:22 PM

Yes, nice move in oil!


Jeff Bailey : 3/22/2007 3:32:45 PM

Indymac (NDE) $29.09 -3.61% ...

Jane Fox : 3/22/2007 3:32:19 PM

Look at the move crude has made today. Wow! Link

Jeff Bailey : 3/22/2007 3:31:30 PM

Swing trade naked put buy back alert ... let's buy back the two (2) Accredited Home Lenders LEND Apr. $7.50 Put (QFW-PU) at the offer of $0.40

LEND $12.58 +5.18% ...

Keene Little : 3/22/2007 3:28:07 PM

Gold update: the 60-min chart of YG (April contract) shows a nice finish to an A-B-C correction to the decline off the February 27th high. Wave-C formed an ascending wedge with the requisite 5 waves inside it (although it could still morph into something a little more complex and still press higher). Link

It closed its gap at 666.90 this morning and did a little throw-over of its wedge. It fell back inside the wedge giving us a sell signal. It now needs to be confirmed with a break below today's 662.30 low. Better confirmation will be a break below 657. Upside potential remains to its 62% retracement at 670.72 but only if it bounces back up soon. If it rallies above 680 then all bearish bets are off the table.

I'm expecting another leg down in gold (and silver) that should see some pretty strong selling, probably in synch with the stock market. A removal of liquidity from the system will affect all asset classes, even gold.

Jeff Bailey : 3/22/2007 3:25:48 PM

VIX.X 12.84 +5.33% ...

Jeff Bailey : 3/22/2007 3:25:24 PM

TRIN 1.13

Jeff Bailey : 3/22/2007 3:25:08 PM

YM long stopped alert 12,524

Jane Fox : 3/22/2007 3:20:16 PM

AD line a -156 and AD volume below 0 again. VIX is testing its daily highs so not a time to be long folks. Heck not a time to be short either but you are probably getting sick of hearing me say that.

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

03:00 Internals found at this Link

Keene Little : 3/22/2007 3:08:41 PM

Referencing your CMGI charts, most daily charts are showing a big "W" pattern. This is exactly the same pattern that appeared on the daily charts just prior to the October, 1987 crash.

And the same risk applies today. Thanks John.

Jeff Bailey : 3/22/2007 3:02:30 PM

03:00 Market Watch found at this Link

Keene Little : 3/22/2007 2:51:35 PM

In case you hadn't noticed, interest rates have done a complete reversal, and then some, from yesterday's post-FOMC decline. Yields are now higher than pre-FOMC announcement. As I suspected would happen, the day-after review of Fed policy is not so bullish after all. The bond market is reacting appropriately while the stock market remains in lala land. Probably not for long. Just give me my swing (position) trade setup tomorrow or Monday, that's all I ask.

Jeff Bailey : 3/22/2007 2:40:43 PM

YM long entry alert 12,550

Jeff Bailey : 3/22/2007 2:40:15 PM

YM long setup alert ... go long a trade at 12,550. Stop goes 12,524, target 12,607.

Keene Little : 3/22/2007 2:27:40 PM

By the way, take a look at the first weekly chart of CMGI. Do you see some similarities between its initial drop off the 2000 high, and the subsequent 3-wave bounce, and what we're getting in the current market? I remember being fooled by that big bounce in CMGI, thinking the correction was over and new highs were coming. I had a bunch of call options on it. The next leg down disabused me of the idea that I wanted to be long the stock. I fully expect today's market to similarly disabuse the bulls on the idea of being long the stock market.

Jeff Bailey : 3/22/2007 2:21:39 PM

USO $50.10 +2.66% ... trying to leverage GREEN #3.

Keene Little : 3/22/2007 2:21:07 PM

If you have time would you give chart analysis on CMGI. What is happening and where is it going? Bill

Wow, there's a blast from the past. I remember CMGI (you tend to remember the ones you lost money on). This stock is a poster child for the tech bust. It's a little slow today so it's a good time to run through how I like to analyze the pattern on a stock, starting with the weekly view and then moving in. In looking over its chart I thought it would be a good one to look at if you're interested in seeing a nice EW pattern for its decline: Link

There are two things to point out in its decline. Frist, what a nice impulsive move down in 2000 it was. The long term view on CMGI is not good--an impulsive move followed by a correction (which is all price action since then has been) will be followed by another impulsive move (down). Obviously CMGI can't lose another $160 but I suspect this stock will be driven into the dirt next.

Second, the decline had a rare 4th wave where it continued to drop while price consolidated the big decline in the 1st quarter of 2000. It's called a running 4th because it runs in the direction of the trend instead of being a counter-trend bounce. Austin, if you're reading this, here's a perfect example of a running 4th. Things were so bearish even the correction couldn't muster a bounce from the end of the 3rd wave down. The end of the 4th (wave-e) must get back above the end of wave-3 and it did by about a dollar.

Now to its present weekly chart. First of all, the sideways price action over the past few years is probably not base building. It's consolidating before a continuation lower (even though it doesn't have far to fall). Notice the intersection of the downtrend line from January 2004 and its broken uptrend line from August 2002--it's at $2.20. That could be tough resistance. Link

Now for a closer look at the daily chart: Link It looks like CMGI is very close to topping out. It has achieved a Fib projection for the leg up from February by hitting $2.07, which is where it was 162% of the first leg up from August (for the A-B-C bounce). Obviously with such a low price on CMGI there's not much downside potential but strictly from a pattern perspective I'd say this one is setting up for another leg down and it could be the one that buries the company.

Jeff Bailey : 3/22/2007 2:17:50 PM

US Oil Fund (USO) $50.00 +2.45% Link ... gets some action and probably 4 X!

Jeff Bailey : 3/22/2007 2:14:32 PM


DJ- EU transport ministers unanimously approve an accord opening up transatlantic air travel. Under the proposal, any European airline will be allowed to fly from any city in the EU to any U.S. city and vice versa.

Jeff Bailey : 3/22/2007 2:13:36 PM


DJ- Senior Fed official agrees to meet with the central bank's board of governors and consider extending existing rules governing lending standards to all state and federal lenders.

Jeff Bailey : 3/22/2007 2:10:42 PM


DJ- Shares shed 13% after children's book publisher post net loss of 18c a share, narrower than its year-ago loss of 37c, but much higher than Wall Street expected. Sales rise 2% to $497 million and sees 2007 earnings below estimates.

SCHL $30.81 -13.35% Link ...

Jeff Bailey : 3/22/2007 2:05:35 PM


DJ- Securities and Exchange Commission takes action against the American Stock Exchange and its former chairman, Salvatore Sodano, for regulatory failures related to exchange's oversight of options trading.

Jane Fox : 3/22/2007 2:04:26 PM

Here is how the markets are trading in relation to their PDRs and like I have been saying all day, virtually untradeable unless you are a very good scalper. Link

Jeff Bailey : 3/22/2007 1:53:08 PM


DJ- Bookstore chain has 4Q net loss of $73.6 million, or $1.25 a share. Excluding items, it earns $1.61, 2c shy of expectations. Sales rise 2.9% to $1.5 billion. Firm will cut the size of Waldenbooks in half and start e-commerce site.

BGP $20.91 -2.42% Link ...

Jeff Bailey : 3/22/2007 1:51:26 PM


DJ- Bookseller reports net income of $127 million, or $1.84 a share. Excluding 3c charge, it meets its own forecast but misses Wall Street's by a penny. Revenue climbs 7% to $1.88 billion.

BKS $37.94 -2.71% Link ...

Jeff Bailey : 3/22/2007 1:45:06 PM

Orient-Express Up on Sale Speculation ... AP Story Link

Jeff Bailey : 3/22/2007 1:44:07 PM

"crazy train" ... OEH $58.00 +5.35% Link ...

Jeff Bailey : 3/22/2007 1:41:16 PM


DJ- Apex Partners and Morgan Stanley Principal Investments raise their bid for the insurer to $41.50 a share from $40 after receipt of undisclosed competing offers. Proposal's original price tag was $1.7 billion. Hub gains 6%, topping revised offer.

HBG $41.50 +5.67% Link ...

Keene Little : 3/22/2007 1:39:06 PM

Interesting comment from a reader (thanks John):

Bears (shorts) are evil. Most people regard folks like us, who short the market, as unpatriotic (at best) or vile, loathsome creatures (at worst). Therefore, when the Fed floods the market with money and sends their vassals (mega bank trading teams) out to do battle and they crush the shorts nobody feels sorry for them (the shorts). In fact, most people just smile and say they got what they deserved.

As you point out, nothing will be done about market manipulation until these Bulls start getting squashed like bugs. That probably won't happen until some of this excess liquidity gets squeezed out of the market and the economy.

John sent me the following link to an article on MoneyNews.com: Link which does a very good job at explaining why the excess liquidity in the markets has been short-term beneficial to all markets and why it could be painful when liquidity is drained. It's a slow day in the market so take some time to read the article as I think it's one of the better summations I've read in a while.

Jeff Bailey : 3/22/2007 1:32:34 PM

01:15 Internals found at this Link

Keene Little : 3/22/2007 1:30:34 PM

CME made an important high yesterday--by getting above the 545.58 low on March 14th it violated the wave-i low in the move down from March 8th. Here's yesterday's chart before the rally that shows the bearish wave count (dark red): Link Now look at today's chart and what the rally has done (with updated wave count depictions): Link

I've reworked the possible wave counts and identified shorter term key levels to follow. For the bears, the current bounce from the March 16th low is only a 3-wave move. That leaves open the possibility that instead of a 4th wave correction as I had it labeled yesterday it's another smaller degree 2nd wave (labeled wave-ii. in dark red at today's high). That interpretation suggests a very fast sell off is just around the corner. The key level for that is a break back below 528.

Because of the multitude of 3-wave moves in this stock it leaves open several wave count possibilities and that suggests caution from both sides as it could whip around and not mean a whole lot. The two bullish possibilities as I currently see them are a straight up rally from here or a sideways triangle first before it rallies to a new high. It takes an upside break of 567 before the bulls have something to cheer about with this stock. This is the updated daily chart (I haven't changed any of the wave count depictions yet since each is still equally possible). Link

Jeff Bailey : 3/22/2007 1:17:18 PM

01:15 Market Watch found at this Link

Jeff Bailey : 3/22/2007 1:13:17 PM

iShares DJ US Home Construction (ITB) components (sorted by YrNet%) with different fundamental measures. MTH is not a component, but mentioned favorable in Morningstar research Link

Ask the question "Why", then look for fundamental answers.

Jane Fox : 3/22/2007 1:07:00 PM

I am very glad I have not tried to trade this mess?

Jeff Bailey : 3/22/2007 12:55:43 PM


DJ- Home builder earns $27.5 million, or 34c a share, as revenue falls 19% to $1.77 billion. Results top expectations. CEO Mezger gives a gloomy outlook, says, 'It is hard to predict when the housing market may stabilize.'

KBH $47.52 -0.56% Link ...

Jeff Bailey : 3/22/2007 12:45:27 PM

Dow Chemical (DOW) $45.57 -0.15% ... off morning's "manipulated" low of $44.68.

Is the "take over" trade speculation finished?

Keene Little : 3/22/2007 12:44:30 PM

GOOG had a good day yesterday with the broader market. I had said it was a good short setup but not if it got above gap close at 454.75 (from March 12th), which would also be a break of its downtrend line from Feb 1, and this is what happened yesterday. If you were short you should have been stopped out. After a small pullback this morning it's trying to press higher again. I suspect it will consolidate with the broader market before it too presses higher again. The broken downtrend line, currently near 452 will probably act as support. Link

A rally above 463 would say the bullish wave count is in play and I'd abandon bearish ideas on this stock. It would take a drop back below its downtrend line, confirmed with a break below 443 to say something more bearish is happening (and likely very bearish with some fast selling behind it). In between those two levels could find price chopping sideways.

Jeff Bailey : 3/22/2007 12:43:06 PM

My 12:36:40 news item ... Yes, there is "manipulation." It should NOT make you cynical. The MARKET is all knowing. Some have information they have learned from research, which EVENTUALLY comes out in the form of news, and why it is so IMPORTANT to be aware of news, then look at a chart, and see if that news has already been factored into PRICE.

Then there is information that is learned from inside sources. It is ILLEGAL to act/trade on such information.

Jane Fox : 3/22/2007 12:38:10 PM

The fact that ES, ER and YM have only retraced to their 23.60% fib level is very bullish. I would have expected a pullback to at least the 50% fib level and would not have ruled out a retracement to 61.80%.

Jeff Bailey : 3/22/2007 12:36:40 PM

Deleware-Based Fund In Brazil Insider-Trading Probe

DJ (partial) - An unnamed Delaware-based investment fund is among 24 investors or companies under investigation in a probe of alleged insider-trading related to the sale of Brazilian oil company Ipiranga, the chairman of the Brazilian Securities Commission said Thursday at a news conference.

Commission Chairman Marcelo Trindade added that the investigation does not threaten the deal itself, in which heavyweight Brazilian energy companies Petrobras (PBR), Ultrapar (UGP) and Braskem (BAK) bought the southern Brazilian oil company Ipiranga. The purchase was announced Monday.

Trindade said the commission, known as the CVM, was investigating what he called an unusual pattern of trading in Ipiranga in the days leading up to Monday's announcement.

He said the unnamed Delaware-based company gained some 3.3 million Brazilian reals ($1.6 million) from the swift purchase and resale of Ipiranga shares. He said another investor, an unnamed Brazilian individual, gained BRL970,000 from similar operations.

Trindade said the CVM was investigating a total of 24 individual investors or companies as part of the probe. He said bank accounts and shares of two investors have been blocked by a court order as a result of the investigation.

Trindade said he could not reveal names of any of the individuals or groups under investigation because of secrecy rules. The court order was the first of its kind in Brazil. Trindade said accounts and shares of others under investigation could also be blocked at a later date. He noted that the penalty for insider trading in Brazil can include jail terms of up to five years.

Keene Little : 3/22/2007 12:31:58 PM

In your 09:15:29 AM comment this morning you said "As I had mentioned in last night's Wrap". Are you referring to a daily Futures Wrap that you author? I always thought you did such a wrap but have never been able to find it off the Option Investors' site. If there is such a Wrap, how do I access it? Or are you referring to your comments on the Monitor at the close of trading? Thanks.

There are nightly market wraps on the Option Investor Daily Newsletter, which is also published in the Premier Investor Newsletter, and I write Wednesday's. Jeff writes Mondays, Jim on Tuesdays and weekends, and Linda on Thursdays. It's a good way to get a different view of what's happening in the market.

It also provides an opporutnity for readers to give us more feedback on how we're doing and what we're writing. I received two emails this morning that are polar opposites. One said he was impressed with how the EW analysis from the beginning of February was very accurate in identifying price levels--both the top in February and the bottom in March. The other email basically said I'm lower than whale excrememt. This tells me I'm doing a good job driving right down the middle (wink). Keep those emails coming!

Jane Fox : 3/22/2007 12:28:08 PM

DATeline WSJ - Presidential hopeful John Edwards is holding a press conference to discuss his plans.

Jane Fox : 3/22/2007 12:16:17 PM

ES is now above its daily open and is printing a +10 but even there the internals are telling me a long position would not have much follow through. There will be better days to trade.

Jeff Bailey : 3/22/2007 12:18:34 PM

The commodity as depicted by the U.S. Oil Fund (AMEX:USO) $49.85 +2.15% looks to confirm the equity side of things.

See Monday's Market Wrap Link

Yesterday's bullish trade profile

Yesterday's comments

And chart three ? for today's action up to $49.50 at this point. Link

Jeff Bailey : 3/22/2007 12:14:37 PM

CBOE Oil Index (OIX.X) alert! 651.74 +2.23% ... sticking its head above February resistance and strong move above 61.8% retracement (645.29) of recent 12/14/06 to 01/11/07 decline.

Jane Fox : 3/22/2007 12:13:54 PM

TICKS are going crazy but I am still sitting on my hands because the AD line is only +122, AD volume is under 0 and my number system for the market I trade, ER, is +6, below daily open. I may not take some profitable trades but I like the odds in my favor and today they are not. So far I have not seen a thing that would convince me to trade.

Jane Fox : 3/22/2007 12:10:45 PM

WASHINGTON (MarketWatch) -- The Federal Communications Commission voted Thursday to examine whether stricter regulation of the Internet is necessary, but it's far from clear if or when the agency might take any action.

In a 5-0 vote, the FCC approved a so-called notice of inquiry into the practices of cable and phone companies that offer high-speed Internet access. At issue is whether network operators are treating Internet users and Internet sites fairly and equally.

A number of interest groups and lawmakers, mostly Democratic, have agitated for clearer rules on what cable and phone companies can do. Some have urged adoption of "Net Neutrality" rules that would bar network operators from discriminating against Internet sites.

Jeff Bailey : 3/22/2007 12:07:30 PM

Analysis: to yesterday's SPY put selling ... When you see put, put, put, put, put activity with a BULLISH bias (put selling is bullish) as a market moves higher and a VIX.X decline, we had better take some note.

I'd have to say market participants gave up on thoughts of an April close below $139 (OI fell from Tuesday's close).

BULLISHNESS presents itself now at, or just below the $141 strike. I didn't (simply forgot) to see what the Avg H/L/C was for the SFB-PK yesterday, but I'll use $1.25 as the average even though there were 6,000 traded on CBOE at $1.10. So ... $141 - 1.25 = $139.75

Keene Little : 3/22/2007 11:59:53 AM

A small 4th wave consolidation in the RUT, followed by a 5th wave up could tag its 78.6% retracement of the decline from February which would also be a retest of its broken uptrend line from August. Any break below 795 would be more immediately bearish but my preferred wave count at this point calls for another high before this tops out. And it could be a very sweet setup around 815 tomorrow. Link

Jeff Bailey : 3/22/2007 11:49:38 AM

SPY's Options Montage with Open Interest observations (update to my post below at 10:31:27) Link

Keene Little : 3/22/2007 11:37:49 AM

With an expected consolidation today and into tomorrow the NDX pattern is the same as I showed for SPX and the DOW. I would be surprised if it dropped below its 50-dma just above 1786. If it were to drop below 1765 then I would turn more immediately bearish otherwise once the 4th wave correction is finished we should get a 5th wave up to finish the leg up from March 14th. Then we'll start looking for the next shorting opportunity. If the 4th wave sets up well it will give us a scalp long before that but those can be a little riskier. Link

Jane Fox : 3/22/2007 11:34:46 AM

SAN FRANCISCO (MarketWatch) -- Gold and silver futures climbed Thursday to their highest levels in three weeks as rallying crude-oil prices and bullish sentiment tied to a less-hawkish-than-expected Federal Reserve statement on interest rates positioned gold to mark a sixth-winning session in a row.

"The prospect of lower interest rates in the U.S. does bode extremely well for gold," said James Moore, metals analyst at TheBullionDesk.com, in a note to clients.

Gold for April delivery rose $3.80 to stand at $663.80 an ounce on the New York Mercantile Exchange. It touched $667.30 earlier, a level not seen since March 1.

Jane Fox : 3/22/2007 11:31:46 AM

March 22 (Bloomberg) -- A closely watched gauge of the future direction of the U.S. economy fell by the most in a year last month as consumer sentiment weakened and builders scaled back construction plans.

The Conference Board's index of leading economic indicators fell 0.5 percent after a 0.3 percent drop in January that was initially reported as a gain, the New York-based group said today. The gauge points to the direction of the economy over the next three to six months.

"It's suggesting we'll continue to have a period of slow to moderate growth," said Kevin Logan, chief economist at Dresdner Kleinwort in New York. "The softness in housing construction will persist for some time."

A wave of subprime mortgage defaults may further shake the confidence of consumers, whose spending has been a mainstay of the expansion. Continued economic weakness increases the odds of an interest-rate cut after Federal Reserve policy makers yesterday stepped back from their preference for higher borrowing costs.

Economists projected the leading index would decline 0.4 percent, according to the median of 58 estimates in a Bloomberg News survey. Forecasts ranged from a decline of 0.8 percent to a rise of 0.1 percent.

Jeff Bailey : 3/22/2007 11:23:31 AM

11:00 Internals found at this Link

Marc Eckelberry : 3/22/2007 11:10:39 AM

At least I think it is tomorrow, 4 business days before 1st notice date which per IB is 3/29/07. IB sends me an e-mail, so I get out before they pull the plug.

Keene Little : 3/22/2007 11:10:23 AM

The decline here looks like it could bottom soon and give us a little bounce. This is all noise but so far I'm seeing confirmation that we're in a choppy consolidation.

Marc Eckelberry : 3/22/2007 11:06:31 AM

It was a great run if you took it with me.

Marc Eckelberry : 3/22/2007 11:06:17 AM

YG April contract will cease for non-physical delivery tomorrow and June contract will take over, I bailed on YG April as traders will offload the current contract. Gold is still bullish, just wait for June to drop and then pick it up. That is the one thing charts will not tell you with commodities.

Jeff Bailey : 3/22/2007 11:03:53 AM

11:00 Market Watch found at this Link

Jeff Bailey : 3/22/2007 11:00:36 AM

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

Jane Fox : 3/22/2007 10:53:39 AM

WASHINGTON (MarketWatch) -- Traditional mortgages and the U.S. banking system are safe from spillover effects associated with the fallout of the subprime mortgage market, a Federal Reserve official said Thursday, as he and other banking regulators faced tough criticism from a Senate committee chief for their role in the market's troubles.

But Roger Cole, the director of the Fed's banking supervision and regulation division, warned in congressional testimony that more borrowers may face problems.

"Some borrowers are clearly experiencing significant and personal challenges, and more subprime borrowers may join these ranks in the coming months," Cole said in testimony prepared for a Senate Banking Committee hearing on the U.S. mortgage market.

Cole and other banking regulators were under attack Thursday by Banking Committee Chairman Christopher Dodd, D-Conn., who said a deterioration of lending standards in 2003 and 2004 combined with higher interest rates on alternative mortgages like ARMs led to "a perfect storm" resulting in hardship for millions of homeowners.

Jane Fox : 3/22/2007 10:49:04 AM

Dateline WSJ - NBC Universal and News Corp. are launching an online-video site in a major challenge to Google's YouTube.

Jeff Bailey : 3/22/2007 10:35:06 AM

EIA: Weekly Nat. Gas Storage Table Link ... build of 17 Bcf

Jane Fox : 3/22/2007 10:28:01 AM

Here are the weekly charts of the US $, Crude and the Swiss Franc and they are all telling me stay on the long side of Gold. Link

Jeff Bailey : 3/22/2007 10:27:29 AM

Bullish swing trade long alert ... for 1/2 position in shares of Coeur D' Alene Mines (CDE) at the offer of $4.07.

Stop $3.85, target $4.60.

(1,200 shares for $10K = Full)

Jane Fox : 3/22/2007 10:25:03 AM

I ain't misbeaving and I ain't trading.

Jane Fox : 3/22/2007 10:23:39 AM

I would like to add my comments to the email Keene received about Gold. I am cynic and I don't believe much I read or hear about the market. I believe whoever is talking has a hidden agenda and listening to Jim Cramer's disgusting tape yesterday just made me even all the more cynical. So how do I trade? Well there is one thing that does not lie to me, charts. Everything everybody knows about a market is reflected in the charts and I read the gold charts as bullish.

Then how do I take into consideration the affect the $ and Oil has on Gold? Once again the charts. This is where I use the weekly charts of crude and the US$ and I then add the Swiss Franc to the mix. These three are all bullish on Gold. This is of course a much longer view but are the reason I stay on the long side. I will bail when the daily charts turn bearish and then jump back in when they turn bullish.

Jane Fox : 3/22/2007 10:12:59 AM

AD line is +120 and AD volume below 0. Like I said before this is not an environment in which you should be trading.

Keene Little : 3/22/2007 10:13:10 AM

You and Jane are at opposites re: Gold prices - why? I thought if financial's went down investors would flight to gold and bonds - Is this not true? Thanks for your insight.

Add Marc who is on Jane's side. Normally I would say your argument makes perfect sense and I will admit I'm a nervous bear when it comes to shorting the metals. There are two things I'm considering to make my recommendation to short gold and silver: one, the EW pattern and two, asset selling.

First, the EW pattern shows an impulsive drop from the high on February 27th which has been followed by an a-b-c bounce. This bounce has achieved equality in the legs and a 50% retracement of the decline. It's a good setup for a short play. It could easily press higher to a 62% retracement just above 671 in which case I'll be stopped out and watching again for a short entry.

Second, the kind of environment I see us heading into will be a difficult one and it will be one where most asset classes get sold, including the metals. Gold will be a good investment where, as you say, there will be a flight to quality when there seems little else of value. But that will be a little further down the road and from a lower level. The wave pattern points to $500, possibly as low as the low 400's, before the longer term pullback is finished.

Jane Fox : 3/22/2007 10:11:55 AM

TICKS +1000 buyers are back.

Jeff Bailey : 3/22/2007 10:05:32 AM

10:00 Market Watch found at this Link

Keene Little : 3/22/2007 10:02:46 AM

My guess is SPX will stay above 1418 in its pullback, certainly above 1410. Any drop lower than that will be a clear break of its uptrend line and signal something more immediately bearish is happening. The market is setting up for another downside surprise from who knows where so I view the long side as the riskier side right now. But ideally we'll get the pullback and final push higher to set up a great short play. If SPX rallies convincingly above 1442 then something a lot more bullish is happening. Link

Jeff Bailey : 3/22/2007 10:02:18 AM

Countrywide insiders selling Link

CFC $36.35 -1.62% Link ...

Jeff Bailey : 3/22/2007 9:58:59 AM

Flaring at Louisiana chemical plant ... Reuters Story Link

Keene Little : 3/22/2007 9:56:37 AM

The DOW chart is a good proxy for what I'd like to see play out over the next couple of days. In the move up from March 14th we're due a 4th wave correction (which are ugly to trade) and ideally it will work its way down/over to the uptrend line from the 14th. It should stay well above 12300 in the process. Link

After that correction, which could take us into tomorrow, we will then be set up for another rally leg in the 5th wave of wave-C. That will be the conclusion of the rally and the time to get short, according to the bearish wave count. If at any time the rally keeps going and convincingly breaks above 12635, the key level on the chart, then we've got a much more bullish market in front of us.

For now, try not to get sucked into the bullish hype you're hearing. This move is very typically scaring the pants off the shorts and convincing the bulls we're headed to new highs. Nor do I think it's time to get super bearish here. The wave pattern is not set up for a hard decline from here. It could happen but that's not the way I'm reading the current pattern. Keep your powder dry.

Jane Fox : 3/22/2007 9:52:18 AM

ES's 23.60 % retrace is 1443 and 50% at 1438.50.

Jane Fox : 3/22/2007 9:50:59 AM

ER's 23.6% correction of yesterday's rally is 811.60, 50% is 807.00 so ER can retrace all the way back to 807 before you could think the bears have taken over.

Jane Fox : 3/22/2007 9:48:51 AM

I truly do not expect a lot of trading opportunities today.

Jane Fox : 3/22/2007 9:35:23 AM

VIX is not printing yet but the TRIN is anything but bullish. Not a time for trading.

Jane Fox : 3/22/2007 9:34:47 AM

AD line is +539 and AD volume above 0. This is neutral to bullish.

Jane Fox : 3/22/2007 9:34:11 AM

ER opens at 816.70 so above this number is +10 and below it is +6. If below I will probably be on the sidelines and I suspect the internals will agree.

Tab Gilles : 3/22/2007 9:32:57 AM

AAPL Apple looks like it filled the gap and a Head & Shoulders pattern is developing. Link

Jane Fox : 3/22/2007 9:31:47 AM

TRIN opens at 1.65 and that has my attention.

Jane Fox : 3/22/2007 9:31:05 AM

Here is the AD volume and AD line from yesterday. Link

Jane Fox : 3/22/2007 9:26:03 AM

Crude is poised to take another run at its resistance at $62.00. Link

Jane Fox : 3/22/2007 9:24:31 AM

I expect Gold to come back and retest its resistance to ensure it is now support before it retests its February highs. Link

Jane Fox : 3/22/2007 9:22:33 AM

Crude is now trading at $61.00/bl - this is very good for my long GLD position but not so good for gas bill.

Keene Little : 3/22/2007 9:21:29 AM

It's starting:

US senator faults Fed on subprime mortgage crisis
Wed Mar 21, 2007 5:59pm ET
WASHINGTON, March 21 (Reuters) - Connecticut Democratic Sen. Christopher Dodd on Wednesday laid blame for the subprime mortgage market crisis at the feet of federal regulators. The chairman of the Senate Banking Committee said in a statement that "a pattern of neglect by federal bank regulators ... precipitated the subprime mortgage crisis that could cause 2.2 million homeowners to lose their homes."

Jane Fox : 3/22/2007 9:20:17 AM

US$ moving up and Crude moving up is the perfect environment for Gold to move sideways.. The $'s rally puts downward pressure on Gold and crude's rally puts an upward pressure so the result is Gold moves sideways. Link

Keene Little : 3/22/2007 9:15:29 AM

I'm looking for the stock market to perhaps make a slightly higher high than yesterday's but it should be close to pulling back and consolidating those gains. As I had mentioned in last night's Wrap, as long as the pullback is corrective (choppy sideways/down) then we should get another leg out of it. But a 1 to 2-day 4th wave correction is in order here. It will make for an ugly trading day or two so don't force trades where there are none.

Jane Fox : 3/22/2007 9:14:37 AM

I thought the best the bulls could do overnight was consolidate the gains they made yesterday but once again they fooled me and both ER and ES have broken their PDHs and YM and NQ are testing those highs. With the bullish move we had yesterday and this bullish overnight session I believe we will have a sideways intraday session and it will be hard to trade. Link

Jane Fox : 3/22/2007 8:53:02 AM

NEW YORK (MarketWatch) -- Touting its role in a growing industry, game maker Glu Mobile Inc. priced its initial public offering near the top of its range for its stock market debut Thursday.

The IPO caught a bit of a break by pricing during a bullish week in the volatile stock market, on the heels of a rally on Wednesday.

The San Mateo, Calif., publisher of mobile games such as Deer Hunter, Diner Dash, Monopoly and World Series of Poker offered of 7.3 million common shares at $11.50, raising $84 million. Glu Mobile's (GLUU) estimated price range for the offering had been $10 to $12 a share.

Jane Fox : 3/22/2007 8:52:05 AM

WASHINGTON (MarketWatch) -- The number of Americans signing up for state unemployment benefits fell to the lowest level in six weeks in the week ending March 17, the Labor Department reported Thursday.

Seasonally adjusted initial claims fell by 4,000 to 316,000. The four-week average of new claims -- considered a better gauge of underlying activity because it smoothes out one-time events such as holidays and weather -- fell by 3,750 to 326,000. Both figures are the lowest since the week of Feb. 3.

Initial claims had risen to a 17-month high in early March.

Jane Fox : 3/22/2007 8:50:37 AM

BOSTON (MarketWatch) -- KB Home (KBH) , one of the nation's largest home builders, said Thursday its first-quarter net income plunged 84% to $27.5 million, or 34 cents a share, from $173.3 million, or $2.01 a share a year earlier. Analysts surveyed by Thomson Financial had forecast quarterly profit of 25 cents a share. Chief Executive Jeffrey Mezger said the company wrestled with the housing downturn which is pressuring home sales and profit margins. "In addition, profit margins on our 2007 first-quarter deliveries were constricted due to the persistent imbalance in housing supply and demand that is fueling intense competition and pricing pressure among home builders and other participants in the new home and resale markets," the CEO said in a statement. "We believe these conditions will likely continue for at least the remainder of 2007."

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