Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
Marc Eckelberry : 3/28/2007 2:06:12 AM

Food for thought: Link

Jeff Bailey : 3/28/2007 12:45:35 AM

Closing Internals found at this Link

Keene Little : 3/28/2007 12:07:16 AM

Based on your [DOW] write-up, if you get the drop on the DOW below 12368, would you short that immediately or wait a bit to see if it bounces up. I guess the risk is it really dropping out of bed like you have been talking about. As you know, I am holding the RUT June 740 puts, but I'm looking for more and was wondering if we get the anticipated gap down, should you just buy more puts at the open.

Therein lies the question, and no easy answer. Assuming it does gap down and drop on Wednesday, and considering you're already positioned, I'd let them work for you and then watch for the first good sized correction to follow the initial leg down to add to the position, but only if you'd be able to place your stop such that you could get out of the whole thing for a profit. That's the best way to ensure a profit and protect against loss at the same time. Anything less is a sure way to squander your trading capital.

Buying puts at the open on a gap down is the surest way to pay top dollar for the options (same with a gap up for call options). I'd rather miss part of the move and get in on a bounce than pay some market maker top dollar for his options (I'm cheap that way). The risk in that situation is for the market to go sideways for a while and you watch your time premium rapidly bleed away. The way to avoid that situation, and a recommended way to play a gap down immediately, is to buy a deep ITM put so that there's practically no time premium.

Deep ITM options is the way the pros do it. They do not buy OTM options. There is still the possibility that a drop at the open will finish a larger downside correction and then up we go in a 5th wave so if you play a gap down you'd have to have your stop at the top of the gap. If you play with ITM puts you can quickly gauge how much risk you're taking on for a given price change and not be subject to the market maker's game.

Keene Little : 3/27/2007 11:55:16 PM

The downside pattern for the RUT is not very clear and leaves open several more possibilities than what I've shown on the others. I show the same two bullish and bearish wave counts on the 60-min chart but I don't have as clear a downside price level that I'd be comfortable calling a key level. I have it at 790 for now but that's only because a pullback that deep would suggest to me that something more bearish is happening. Link

If we get a strong sell off in the small caps I'm guessing the others will be right behind but a continuation of the choppy pullback would say we might get the upside resolution instead. The daily chart hasn't changed and shows price and time projections into a low in May if the selloff starts right away. Link

Keene Little : 3/27/2007 11:03:55 PM

Same patterns for the SPX:
60-min: Link
Daily: Link

NDX hasn't pulled back near Monday's low, as SPX and DOW did, so that changes its short term pattern a bit. But the potential setup is the same as shown for the other two.
60-min: Link
Daily: Link

I'll update the RUT in a little bit.

Keene Little : 3/27/2007 10:56:56 PM

Even after the U.S. Navy has denied any attacks by Iran on its ships there is the hangover from the spike down on the rumor. We've got a nervous bunch of traders out there who are hovering over the sell button. One serious scare and this market is in trouble. We could get a relief rally on Wednesday if nothing bad happens overnight.

I had mentioned after the rumor-inspired drop that I had been talking with a fellow EW trader and he and I were discussing the possibility that instead of a 4th wave correction the past few days that perhaps the bounce topped out last week to finish correcting the decline from February's high and now we've been starting (slowly) the next leg down. That would require an interpretation of the wave pattern as a bearish 1-2, 1-2 wave count to the downside. So I've updated some of the charts to show that possibility.

I'll re-post those updates to make it easier to access (rather than having to go back to yesterday's archive):

Tuesday afternoon I showed a DOW 60-min chart with the idea that we were seeing a sideways triangle playing out for a 4th wave correction that would then lead to a 5th wave up to complete the rally from March 14th. This is the earlier chart: Link This pattern requires price to stay above the wave-a low just under 12368. Any drop through that level would negate this pattern. The DOW closed at 12397 so any early drop on Wednesday morning could bust up this pattern.

The bearish wave count from last week's high is a 1-2, 1-2 wave count to the downside which would mean a quick drop is right around the corner. Whether that happens at the open on Wednesday or after an early morning bounce is hard to tell but any break below 12367 would be potentially bearish, hence the key level mark at that level on the chart. The bearish wave count has been added in this updated chart: Link

I've been keeping the bearish wave count on the daily chart because I haven't seen a reason to change it yet. This is the updated chart based on an immediate decline from the current pattern and shows some potential price and time projections for the decline. On a daily basis, any drop back below 12200 would look like something more bearish is underway. Link

Keene Little : 3/27/2007 10:48:03 PM

Wednesday's pivot tables: Link and Link

OI Technical Staff : 3/27/2007 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.

Keene Little : 3/27/2007 8:40:27 PM

NDX hasn't pulled back near Monday's low, as SPX and DOW did, so that changes its short term pattern a bit. But the potential setup is the same as shown for the other two.
60-min: Link Daily: Link

Keene Little : 3/27/2007 7:44:05 PM

Using the DOW's 60-min chart I'll show the possibilities for a bullish and bearish wave pattern. As I mentioned earlier it's possible we've been developing a bearish wave pattern over the past few days that is getting ready to bust loose to the downside. The after-hours rumors about Iran attacking a Navy ship, and the resulting spike down in equity futures, shows how vulnerable the market is right now.

This afternoon I showed a DOW 60-min chart with the idea that we were seeing a sideways triangle playing out for a 4th wave correction that would then lead to a 5th wave up to complete the rally from March 14th. This is the earlier chart: Link This pattern requires price to stay above the wave-a low just under 12368. Any drop through that level would negate this pattern. The DOW closed at 12397 so any early drop on Wednesday morning could bust up this pattern.

The bearish wave count from last week's high is a 1-2, 1-2 wave count to the downside which would mean a quick drop is right around the corner. Whether that happens at the open on Wednesday or after an early morning bounce is hard to tell but any break below 12367 would be potentially bearish, hence the key level mark on the chart. The bearish wave count has been added in this updated chart: Link

I've been keeping the bearish wave count on the daily chart because I haven't seen a reason to change it yet. This is the updated chart based on an immediate decline from the current pattern and shows some potential price and time projections for the decline. On a daily basis, any drop back below 12200 would look like something more bearish is underway. Link

Marc Eckelberry : 3/27/2007 6:05:28 PM

I booked profits and I will wait andsee what develops. I have seen these things turn on a dime before.

Marc Eckelberry : 3/27/2007 6:00:38 PM

At least we know where oil reistance is. And NQ support (10 DMA).

Marc Eckelberry : 3/27/2007 5:59:16 PM

I doubt it. SEC can track that very easily. It was too quick.

Keene Little : 3/27/2007 5:55:54 PM

Marc, you don't suppose someone, oh maybe in one of the megabank's trading teams who happens to trade oil, could have been long a couple hundred contracts and then started a silly little rumor like that do you? Spike oil on a rumor, cover your long, pocket $5M or $50M for 30 minutes worth of work, and call it a (nice) day. Nah, only Cramer did stuff like that.

Marc Eckelberry : 3/27/2007 5:51:21 PM

QM closed at 64.425, we will see where it re-opens. It seems Globex is closed as well. If oil holds 64, regardless of the news, it will be tough for NQ.

Jeff Bailey : 3/27/2007 5:45:13 PM

US Defense Department: No Report Of Conflict In Persion Gulf

Jeff Bailey : 3/27/2007 5:41:38 PM

Crude Oil Futures (cl07k) settled up $0.02, or +0.03% at $62.93.

Jeff Bailey : 3/27/2007 5:40:57 PM

Closing U.S. Market Watch found at this Link

Marc Eckelberry : 3/27/2007 5:36:12 PM

WASHINGTON (Reuters) - The U.S. Navy on Tuesday said it had no information to substantiate a market rumor that Iran had fired at a U.S. naval vessel in the Gulf. "Navy has nothing to substantiate that report right now," a Navy official said. "At this juncture, there is no validity to it." "We have no information at this time that indicates any incident taking place," said White House National Security Council spokesman Gordon Johndroe. NYMEX crude oil futures shot up more than $5 to trade above $68 a barrel on rumors about Iran, traders said.

Marc Eckelberry : 3/27/2007 5:31:32 PM

CNBC and Bloomberg are USELESS. Glad I had my screen up and saw the jump in oil. At least I gave you the heads up, while NQ was still at 1809.

Marc Eckelberry : 3/27/2007 5:30:26 PM

It must have been middle east buyers, because we heard nothing here. either that, or someone had fun spreading a rumor and collecting a fortune.

Jeff Bailey : 3/27/2007 5:29:46 PM

DJ- Rocket Kills US Contractor In Baghdad's Green Zone

Keene Little : 3/27/2007 5:29:24 PM

ES is slowly making its way back up so some news may be quieting down the initial concerns, whatever they were. Either that or some player is working ES back up so as to "help" the market stay afloat.

Jeff Bailey : 3/27/2007 5:28:12 PM

Oil Futures: Nymex Crude Surges on Iran Rumor

DJ- Crude oil futures jumped nearly 8% in a matter of minutes in afterhours trading Tuesday, topping $68.00 as rumors of a military confrontation in the Persian Gulf involving Iran spurred panic buying.

The exact nature of the rumored confrontation could not be learned immediately but traders and analysts said the $5-plus jump in prices could only have been triggered by concern that has buoyed prices in recent days: a U.S.-Iran or U.K.-Iran military confrontation.

"That's certainly the most likely scenario," said Kyle Cooper, an analyst at IAF Advisors in Houston. "For a move of this magnitude something must have happened in the Persian Gulf."

Crude oil for April delivery on the New York Mercantile Exchange climbed more than $5 to hit a high of $68.09 a barrel, the highest level for a front-month contract since September, before giving back most of its immediate gains.

Brent on ICE Futures rose more than $4 to a high of $69.00 a barrel.

The surge in prices came amid massive buying, traders said.

"This has got to be about Iran," a trader said.

Marc Eckelberry : 3/27/2007 5:17:17 PM

The story is nowhere to be found which means when it comes out, we could get a few more sellers. NQ S1 is 1804 and R, although oil is closed so we could get a short covering bounce.

Jeff Bailey : 3/27/2007 5:16:47 PM

DJ- Crude Oil Spikes on Iran Rumor

Keene Little : 3/27/2007 5:14:25 PM

If this negative action in the futures carries over into tomorrow it will be yet another example of what I've been warning about--watch out for downside surprises. And it will make it once again difficult to short since we have no idea what kind of bounce back we could get.

Keene Little : 3/27/2007 5:12:06 PM

Interesting. I was just talking with a fellow trader about the possibility that last week's high was in fact the end of the bounce (as a correction to the decline off the February high) and that we've done a small 1-2, 1-2 to the downside (instead of a sideways triangle as I showed on the DOW and SPX). I'll put some charts together but what it says is get ready for a gap down and strong decline to follow. Hmm, very interesting.

Marc Eckelberry : 3/27/2007 5:08:53 PM

Blair must have gotten heavy on Iran. That is all I can think of. Gold should shoot up when it re-opens.

Keene Little : 3/27/2007 5:08:51 PM

Plus with gold and silver spiking into the 5:00 close and equity futures spiking down, it certainly looks like something may have happened in Iran, what with all their saber rattling going on over there. I can't find any news either.

Marc Eckelberry : 3/27/2007 5:06:06 PM

Where is the NEWS??? Bla bla bla on TV, but oil just shot up, there must be a reason.

Marc Eckelberry : 3/27/2007 5:05:28 PM

If you went short with me, support is 1800.25 followed by 1798.

Marc Eckelberry : 3/27/2007 5:03:56 PM

NQ now at 1802, did hit 1796 a few minutes ago.

Marc Eckelberry : 3/27/2007 5:03:36 PM

I can't find the news that drove QM up to 66.

Jeff Bailey : 3/27/2007 5:01:52 PM

Feds probing lending at Beazer ... Reuters Story Link

Jeff Bailey : 3/27/2007 5:00:59 PM

Beazer Homes (BZH) $31.41 -2.81% ... plunging to $27.00 extended.

Marc Eckelberry : 3/27/2007 4:53:43 PM

I took a quick NQ short at 1809.50 when I saw oil jump.

Marc Eckelberry : 3/27/2007 4:50:40 PM

Careful, something is going on with oil. at 64.50 now.

Jeff Bailey : 3/27/2007 4:30:54 PM

Lennar (LEN) $44.50 -0.08% ...

Jeff Bailey : 3/27/2007 4:26:01 PM

Countrywide Financial (CFC) April, May, July options montage at this Link

Received an email question regarding a trade that took place on Thursday, in the May $32.50 Puts (CFC-QZ). Trader said he saw 5,658 contracts trade.

I looked at an intra-day chart of those options (I only see/get CBOE) and can't tell if they came on DnTick, or UpTick Volume.

Jeff Bailey : 3/27/2007 4:12:51 PM

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

Jeff Bailey : 3/27/2007 4:08:23 PM

FCEL went out $8.70 +20.83% ...

Marc Eckelberry : 3/27/2007 4:06:46 PM

The mantra to buy gold and oil, sell stocks and maybe buy some Yen still stands. This is the perfect stagflation set up. (oil and gold do well in stagflation scenarios, stocks meander).

Marc Eckelberry : 3/27/2007 4:03:20 PM

There are no reasons for the markets to go up other than short covering and EOQ dressing. Maybe some faith in Bernanke tomorrow. But I am starting t think we saw the highs. NQ 1831 is very compelling, right at the Feb gap. I am watching YM and the 12471 level, see how that holds up in the coming days.

Marc Eckelberry : 3/27/2007 3:59:02 PM

Retail traders are all thinking the market will do the same as yesterday (rally into the close). It won't.

Keene Little : 3/27/2007 3:53:33 PM

For your end-of-day trading, the move up off the last low around 2:30 looked impulsive and that leads me to believe another rally leg should follow, either into the close or first thing tomorrow morning.

Keene Little : 3/27/2007 3:49:49 PM

What's lining up nicely as well is VIX correlation with the idea that we're going to get a rally out of the current price consolidation that will then set up a nice short play. Assuming the VIX will drop with a market rally, it could get it down to its new uptrend line near 10.50. That would also have the VIX doing a brief punch through the bottom of its Bollinger Band (light gray) and a reversal from that would be a "buy" signal on VIX and a sell signal on stocks. A new price high with a VIX back down to that level, and its oscillators back in oversold, would be a very good short setup. Link

Jeff Bailey : 3/27/2007 3:45:20 PM

FCEL $8.79 ....

YM 12,490

SPY $142.85

Jeff Bailey : 3/27/2007 3:41:27 PM

TRIN 1.07 11.45 ... session low, but right on 1.00 with WEEKLY Pivot 1.09.

The market isn't giving much today.

Jeff Bailey : 3/27/2007 3:40:15 PM

IWM $79.57 -0.56% ... WEEKLY Pivot right here.

Jeff Bailey : 3/27/2007 3:39:27 PM

FCEL $8.80 ...

YM 12,493 ...

Keene Little : 3/27/2007 3:37:59 PM

The DOW and SPX held on the last pullback at the bottom of their potential sideways triangles. Price action is "tediously boring" and slow (agree with you on that Denise) and it's prolonging the triangle where it could play out all day tomorrow as well. Are we really on hold for Bernanke? Give me a break! As long as price holds inside this pattern it will be boring until wave-e finishes and then we should get a nice tradeable long out of it (so that Uncle Ben can get the credit, gag me with a spoon). Link

Jeff Bailey : 3/27/2007 3:36:16 PM

YM 12,496 ... should'a stayed in bed today.

Jeff Bailey : 3/27/2007 3:35:44 PM

Day trade short stop alert ... for FuelCell Energy (FCEL) $8.81.

Keene Little : 3/27/2007 3:23:55 PM

I read your post @2:04:32 about the possiblilty of something much further to the upside. I know nothing is out of the question, but it sure looks to me like the 50 day MA is about to cross over the 100 day MA on all the indexes I have looked at. The SPX looks to be the furthest away from this. It seems to me that this would make it more difficult resistance to cut through. Any thoughts?

Scott, good observation on that moving average crossover. It would indeed start to look a lot more bearish if that happened. But if that got people leaning to the wrong (short) side then a couple of strong buy programs could quickly induce some strong short covering.

Don't forget, we still have the Fed worried about both inflation and a slowing economy. Not raising rates while continuing to juice the economy with freshly minted presidents (from Helicopter Ben) could be a tactic they'll employ strongly this year.

At this point I'm not leaning towards the mega-bullish scenario but I have to consider all options (no pun intended). Those who are long some put options, waiting for the slam down as I've been depicting need to be aware that that scenario is now in jeopardy.

This market still requires us to short term trade until we get a clearer setup. I thought we had a great setup but the size of this "bounce" has now made it less clear and has opened up the possibility (no matter how small I think it is) that we've got some very bullish times ahead of us. It happened in 1987 before the crash (the market rallied about 20% from a pullback earlier in the year, just as we've seen in March) and it could happen the same way this year.

We need to let the price pattern lead the way and right now there are enough doubts about the short term pattern to keep me short term trading. I'll certainly be getting short once we get a 5-wave move out of this in case it's the start of a big leg down, but I don't want anyone holding on for the "big" one--continue to take chunks out of this market until we know it's safer to hold on for a position trade.

Jane Fox : 3/27/2007 3:22:26 PM

An AD line at -1333 should be enough information to keep you from trying to get long today.

Marc Eckelberry : 3/27/2007 3:17:39 PM

The markets have discounted the bad news, it seems. Shorts are going nowhere.

Jeff Bailey : 3/27/2007 3:16:22 PM

Countrywide Financial (CFC) $34.87 -3.78% ... slips to session lows.

Jeff Bailey : 3/27/2007 3:14:06 PM

03:00 Internals found at this Link

Jeff Bailey : 3/27/2007 3:09:14 PM

YM 12,490

Jeff Bailey : 3/27/2007 3:09:03 PM

CAT $67.02 +0.25% ... inches green.

Keene Little : 3/27/2007 3:04:55 PM

Based on my comment about a silver short I was asked for a recommendation on some silver stocks. If I'm correct about gold and silver declining over the next couple of months, then the basket of gold and silver stocks, the XAU, should also decline. But its daily chart is not so obvious. In fact it looks like it's been in a long sideways consolidation since the high in May 2006. It's currently in the middle of a sideways triangle and it's hard to tell where it's going next.

For some reason QCharts is having a problem displaying a few of the Philly index sectors so here's a weekly chart off stockcharts.com: Link With price consolidating in a sideways triangle after the run up from 2005, it looks like a bullish consolidation pattern. Currently price has stalled at its 50-wma. MACD looks very neutral here.

The daily chart shows price is currently being supported by both its 50 and 200-dma's near 137.50. MACD is below zero and if it rolls over from here it will be bearish, but it needs to roll over right away otherwise there's upside potential to the top of its triangle near 145. So if you short the XAU here, use yesterday's high at 139.35 as your stop. Link

Jeff Bailey : 3/27/2007 3:02:38 PM

03:00 Market Watch found at this Link

Jane Fox : 3/27/2007 2:59:00 PM

All the large cap markets have made a higher low and ER has made a double bottom. I think the lows are in for the day. That does not mean you can go long but I think trading is over for the day.

Jeff Bailey : 3/27/2007 2:39:07 PM

FuelCell (FCEL) $8.65 +20.13% ... day trader's 5-minute interval chart at this Link

Marc Eckelberry : 3/27/2007 2:37:19 PM

They are holding 61.8% ES and 50% YM (2007 fibs). No traction.

Jeff Bailey : 3/27/2007 2:32:36 PM

Day trade short alert for shares of FuelCell Energy (FCEL) at the bid of $8.65 +20.27%, stop $8.81, target $8.12.

Jane Fox : 3/27/2007 2:32:18 PM

Right on cue, YM did a nice bounce off of its PDLs and is now trying again. ER is making a double bottom as well. Link

Marc Eckelberry : 3/27/2007 2:29:17 PM

I want to buy some Yen, but I don;t dare with higher oil. JPY does not like higher oil, normally, even though the dollar is weaker. better to buy some Canadian dollars (CAD).

Marc Eckelberry : 3/27/2007 2:26:33 PM

Oil bids.

Jeff Bailey : 3/27/2007 2:26:15 PM

ICE To Introduce WTI Crude Oil Futures Options April 20th

Intercontinental Exhcange (ICE) $122.32 +1.21% ...

Jane Fox : 3/27/2007 2:25:55 PM

Aren't you glad you stayed short?

Marc Eckelberry : 3/27/2007 2:25:45 PM

I'm just waiting patiently for a retest of NQ 1800.

Marc Eckelberry : 3/27/2007 2:24:43 PM

This market should have sold off much harder (it can still happen). If you are scalping this, you know what I am talking about. The constant little bids that pop up, then the quick jabs of selling. This is portfolio adjustment brought on by end of quarter, and that includes yesterday's spike off lows. Of that I am pretty certain.

Jeff Bailey : 3/27/2007 2:24:13 PM

AccuWeather: '07 Hurricane Season Seen More Active Than '06.

Jeff Bailey : 3/27/2007 2:22:38 PM

yes it is starting to look attractive isn't it?

30-year yield ($TYX.X) 4.812%.

Keene Little : 3/27/2007 2:21:16 PM

One thing I do still like is my silver short but it needs to drop right away now after bouncing back up yesterday. Otherwise a little sideways consolidation could be setting up another rally leg (same with gold). Yesterday's high is now my lowered stop level. If I've got the wave count correct, with the A-B-C bounce completed, the next leg down will be a 3rd wave and in commodities these can be very fast moves. So at this point it's a small risk for a big potential gain, my kind of trade. Link

Jeff Bailey : 3/27/2007 2:21:41 PM

Pacholder High Yield (PHF) $10.24 +1.89% ... dividend run most likely. Another $0.075 this month. Payable on 04/10/07 to shareholders of record on 03/30/07.

Up $0.19 here ... that's almost 3-months of dividend.

Jeff Bailey : 3/27/2007 2:19:31 PM

check that ...

Jeff Bailey : 3/27/2007 2:19:16 PM

Not much sign of "window dressing" on a broader scale.

Not that I can see.

Not much undressing either.

1st quarter comes to an end on Friday.

Jeff Bailey : 3/27/2007 2:17:46 PM

YM 12,476 ...

Jeff Bailey : 3/27/2007 2:16:32 PM

EWJ $14.75 -0.47% ... on a $0.25 box scale.

Jeff Bailey : 3/27/2007 2:15:34 PM

Relative Strength Chart of the EWJ vs. SPY on a 0.25 box Link ... add a little more "noise." Now relative strength "sell," column of X.

Keene Little : 3/27/2007 2:14:27 PM

The patterns in the NDX and RUT, are not helping matters here since they look different enough from the DOW and SPX to cause confusion as to what this market is up to. It's hiding its intentions rather well at the moment, at least from an EW perspective. If I ignore the little squiggles then I could simply say all are consolidating and that portends another push higher. But my confidence level in what is happening short term is lower than I like and that has me on the sidelines waiting for some clarity here.

Jeff Bailey : 3/27/2007 2:13:28 PM

Relative Strength Chart of the EWJ vs. SPY on 0.50-box Link ... a little weaker near-term. RS "buy" is longer-term strength, column of O is near-term weakness.

Jane Fox : 3/27/2007 2:11:24 PM

These also should help to keep you on the short side. Link

Jeff Bailey : 3/27/2007 2:09:17 PM

iShares Japan (EWJ) $14.74 -0.53% ... with dueling retracement Link

Jane Fox : 3/27/2007 2:06:49 PM

These should be keeping you on the short side. Link

Keene Little : 3/27/2007 2:04:32 PM

The more I think about this pattern the more I'm leaning towards the leg up from March 14th being either the end of the rally from July or just the start of something very big to the upside (with the leg up from March 14th being just the 1st wave of a much bigger move up that's coming). The only way we'll be able to tell is what happens after the current leg up is done and right now I'm showing the same sideways triangle 4th wave idea on this SPX 60-min chart as I showed on the DOW. Link

After the 5-wave move completes to the upside here, assuming it will follow the path I've depicted, we'll get a pullback at a minimum to correct the 5-wave move. If we've got much more bullish things ahead of us, then the pullback will be just a correction to the leg up from March 14th and then blast higher again. Otherwise a double top near 1460 could set off another round of selling, but it would not be the swift decline that I've been depicting (as a strong 3rd wave down). It means manage your risk carefully and don't let long options bleed away while we wait for the market to give us more clues.

Marc Eckelberry : 3/27/2007 2:04:05 PM

It's just plain and simple EOQ window dressing. The worst days to trade.

Jeff Bailey : 3/27/2007 1:58:19 PM

I think that volume spike in SPG on 03/23/07 was a short. Shorted down from juuuust under $116, then billed out/crossed at $114.89.

Jeff Bailey : 3/27/2007 1:55:55 PM

Simon Property Group (SPG) $110.25 -1.43% ... at the mid-point of its PnF 10-week trading band.

WEEKLY Pivot Levels ... $107.47, $110.97, Piv= $113.45, $116.95, $119.43.

Jeff Bailey : 3/27/2007 1:53:40 PM

IndyMac (NDE) $29.57 -0.97% ...

Jeff Bailey : 3/27/2007 1:52:48 PM

NFI $5.00 -6.36% ... all over the place today. Low/high $4.68/$5.44

Jeff Bailey : 3/27/2007 1:46:01 PM

iShares Russell 2000 (AMEX:IWM) 79.69 -0.1% ... kisses its 19.1% retracement this morning at $79.38. Creeps to an afternoon high.

Jeff Bailey : 3/27/2007 1:34:31 PM

NASDAQ a/d 993/1934

Jeff Bailey : 3/27/2007 1:34:19 PM

NYSE a/d 964/2240

Jeff Bailey : 3/27/2007 1:33:51 PM

If I go short the YM here, you know the a/d line will finish even.

With YM at DAILY Pivot.

Jeff Bailey : 3/27/2007 1:32:02 PM

TRIN 1.27 ... sticks its head back above DAILY Pivot.

Jeff Bailey : 3/27/2007 1:31:23 PM

YM taps WEEKLY Pivot 12,476

Jeff Bailey : 3/27/2007 1:30:46 PM

YM long stop alert ... 12,480

Jane Fox : 3/27/2007 1:22:34 PM

If you didn't get your short trade in already I think you may be too late now. The markets have all made a reverse H&S now and the picture although still bearish is much less clear than it was earlier.

Keene Little : 3/27/2007 1:23:10 PM

It's looking like we could get another laborious climb back up by the end of the day, like yesterday's. There's just nothing behind this and yet the sellers are nowhere to be found.

Jeff Bailey : 3/27/2007 1:15:31 PM

Great pattern recognition in AAPL, but I hope any traders that did short the stock based on pattern had stops just above that "right shoulder."

Jeff Bailey : 3/27/2007 1:12:48 PM

AAPL $96.67 +0.85% ... ssssqueeeeeze.

Keene Little : 3/27/2007 1:12:41 PM

I already tried that Jeff, didn't help ;-)

Jeff Bailey : 3/27/2007 1:11:27 PM

Need a magnifying glass to see any volume bars today.

Jeff Bailey : 3/27/2007 1:09:14 PM

YM taps MONTHLY Pivot (12,497)

Jeff Bailey : 3/27/2007 1:08:53 PM

01:00 Internals found at this Link

Keene Little : 3/27/2007 1:06:34 PM

AAPL has had a nice run from its low in late February, up more than $13 from that $83 low. It looks like it's got the $100 level in its sights. Being a somewhat slow choppy day here, perhaps you'll enjoy this little spoof on Steve Jobs and maybe a little political commentary in there as well. Link

Jeff Bailey : 3/27/2007 1:01:57 PM

01:00 Market Watch found at this Link

Jeff Bailey : 3/27/2007 12:40:20 PM

YM long entry alert ... go long here at 12,495 , stop 12,480 , target 12,540.

Jeff Bailey : 3/27/2007 12:34:37 PM

LEND $11.29 +4.44% ... BIG reversal from morning lows of $9.40.

Marc Eckelberry : 3/27/2007 12:33:34 PM

YM holding 12471 could be supportive if not bullish.

Marc Eckelberry : 3/27/2007 12:31:58 PM

But who knows.

Marc Eckelberry : 3/27/2007 12:31:45 PM

I think we are seeing residual dip buyers from the NQ reversal yesterday. I don;t think any funds are buying this.

Marc Eckelberry : 3/27/2007 12:31:15 PM

Unless they have decided to hold DOW 12400. Lots of bad news today but bears can't get real traction. Very confusing since yields are up and the Yen is up.

Jeff Bailey : 3/27/2007 12:28:57 PM

Can't seem to get my arms around a trade. Such a weak a/d line, but rather modes losses making me edgy.

Jane Fox : 3/27/2007 12:28:46 PM

HEMPSTEAD, N.Y. (MarketWatch) -- Reports that the Federal Reserve is ready to cut interest rates are greatly exaggerated.

Call it viewing the glass as half full, or maybe just plain wishful thinking. However you describe it, the markets' reaction to the statement that the Fed issued at the conclusion of last week's Open Market Committee meeting was hasty at best, misinformed at worst.

The statement may have changed a bit, but the Fed's intent remains the same -- indeed, one might even say steadfast. Right or wrong, as far as the Fed is concerned, fighting inflation is still job number one.

Keene Little : 3/27/2007 12:28:58 PM

The corrective price action since last week's high has me wondering if we're in a 4th wave correction for the move up from March 14th, as shown on this DOW 60-min chart. If so, we should chop sideways for another day and then get the last rally leg out of it (sideways triangles always point to the last move of the trend). Perhaps Bernanke's talk tomorrow will be the reason du jour. Link

Upside Fib targets out of this kind of consolidation (depending on where the final pullback stops) will be around 12540 and 12635. The upper Fib projection would also be a 78.6% retracement of the decline off the February high. This pattern also says trading today could be choppy and full of whipsaws. Flat is good. But if the decline continues then watch for potential support at the early March highs near 12340.

Marc Eckelberry : 3/27/2007 12:25:28 PM

This action looks like lower lows ahead.

Marc Eckelberry : 3/27/2007 12:21:17 PM

If the Yen bids up some more, we could get an NQ flush to 1800, but I bet it will be bought ahead of Bernanke speeches.

Marc Eckelberry : 3/27/2007 12:20:38 PM

Crap day to trade. Only the pre-open gave some entries.

Keene Little : 3/27/2007 12:03:51 PM

With the SPX 50-dma at 1424.15 and today's low at 1425.54 we know why traders were buying the dip. The DOW has found its 50-dma (12466.90) to be resistance, as yesterday's close and today's high were at its 50-dma. But NDX is also finding support there--at 1784.39 it wasn't quite tested at this morning's 1787.98 low. The RUT is still above its 50-dma. So we're left with a mixed picture between the indices but this moving average alone we can see where the relative strength lies.

Marc Eckelberry : 3/27/2007 11:52:07 AM

It's the Yen gyrations.

Jane Fox : 3/27/2007 11:49:31 AM

It looks like ER is going to give us another chance to get short but each time a "get short" opportunity arises the odds of it working get less and less and eventually the bulls take over and you get stopped.

Keene Little : 3/27/2007 11:48:17 AM

Use the same highs for the other indices as well. Something doesn't feel right about the bearish side here. But if those highs hold and this drops back down to a new low then the wave pattern turns more bearish and the selling could intensify.

Keene Little : 3/27/2007 11:47:12 AM

A look at the NDX 15-min charts shows a fairly well defined 3-wave move down this morning and any rally back above its 1796 high near 11:00 AM would suggest new highs are coming. If short I'd use that as my stop (NQ 1816).

Keene Little : 3/27/2007 11:43:43 AM

I agree Marc, and it's making the downside pattern this morning somewhat corrective looking. Hard to trust the downside here.

Marc Eckelberry : 3/27/2007 11:40:09 AM

Someone keeps coming to the rescue.

Jane Fox : 3/27/2007 11:36:36 AM

NEW YORK (MarketWatch) -- Aruba Networks rose as much as 20% in its stock market debut Tuesday as investors clamored for shares of the rapidly growing competitor to Cisco Systems.

A player in the wireless local-area-network market, Aruba Networks (ARUN) priced 8 million shares at $11 each in a bid to raise $88 million. The stock opened at $14 and changed hands at $13.18 for a gain of about 20% in midday action.

The networking firm's initial public offering thus turned out richer than the previously estimated range of $8 to $10 a share in a sign of strong investor interest.

With customers that include Google, Burlington Northern Santa Fe, Guangzhou Metro, SAP and the U.S. Air Force, Aruba touts its mobile technology offering secure mobility, improved application performance in mobile environments, ease of deployment and integration, cost-effective scalability, and a flexible platform for emerging mobile applications.

Jane Fox : 3/27/2007 11:33:39 AM

Another thing to add to your bearish outlook today is that the MACD has not gotten above 0 all day. Link

Keene Little : 3/27/2007 11:33:15 AM

CME continues to look confused, or maybe it's just me. The number of 3-wave moves in this stock continues to leave open several possibilities, as per the daily chart: Link

The 60-min chart shows the possibility for this stock to rally back up near a Fib projection for two equal legs up off the March 16th low. It takes a break below the lower uptrend line near 523 to suggest something more bearish is going on. Link

Jane Fox : 3/27/2007 11:31:35 AM

YM is now testing its PDL and I would expect to see support here.

Jeff Bailey : 3/27/2007 11:25:13 AM

11:10 Internals found at this Link

Jane Fox : 3/27/2007 11:25:01 AM

ER is the market to short today.

Jane Fox : 3/27/2007 11:24:37 AM

ES breaks to a new daily low.

Jane Fox : 3/27/2007 11:24:12 AM

ER is now testing its PDL

Jane Fox : 3/27/2007 11:20:54 AM

Here is an update on the stock Regan asked me to profile a couple of weeks ago, VLO. Wow you made a great pick here Regan. Link

Keene Little : 3/27/2007 11:19:49 AM

For those of you who may have shorted GOOG yesterday when it closed its gap and hit the Fib projection for two equal legs up from March 5th, your stop should now be just above yesterday's high. It was a very nice setup yesterday so now all it needs is follow through to the downside. Link

Jane Fox : 3/27/2007 11:16:08 AM

Looks like the market is giving us time to get short.

Jeff Bailey : 3/27/2007 11:12:08 AM

11:10 Market Watch found at this Link

Jane Fox : 3/27/2007 11:10:45 AM

I may have gotten that last post out too late though.

Jane Fox : 3/27/2007 11:10:23 AM

I think this could be a good spot to take a short with a stop just above the last swing high.

Jeff Bailey : 3/27/2007 11:06:11 AM

FuelCell Energy Chosen in Connecticut ... AP Story Link

Jeff Bailey : 3/27/2007 11:00:43 AM

FuelCell Energy (FCEL) $8.39 +16.38% Link ...

Keene Little : 3/27/2007 10:59:42 AM

We've got a relatively small 3-wave bounce here so it could turn right back around and head lower. But the short term charts support a larger bounce and if it stay corrective looking then we could get another short play to set up. Watching for now.

Jeff Bailey : 3/27/2007 10:57:15 AM

US REDBOOK RETAIL SALES EDGE HIGHER

DJ- U.S. chain store sales rise 0.7% in first three weeks of March compared with February, according to Redbook Research. Meanwhile, International Council of Shopping Centers-UBS Retail Chain Store Sales Index rises by 0.2%.

RLX.X 512.98 -0.81% Link ...

Jeff Bailey : 3/27/2007 10:52:53 AM

CHRYSLER BIDS MAY COME THIS WEEK

DJ- Blackstone and Cerberus are in final stages of presenting offers, which may come Thursday, as bidders sign up Wall Street banks to support proposals, Detroit News reports. Shares of Daimler, which delays interim report, rise 2%.DCX $82.54 +1.65% Link ...

Jeff Bailey : 3/27/2007 10:49:55 AM

LENNAR 1Q NET SINKS 73% AMID HOUSING WOES, WITHDRAWS VIEW

DJ- Shares fall 3% after home builder posts earnings of $68.6 million, or 43c a share, citing 'overall weakness' in the housing market. Revenue drops 14% to $2.8 billion. Analysts expected earnings of 43c a share on revenue of $2.49 billion. Lennar says it won't meet its full-year target of $3.69 per share and doesn't set a new goal, noting that the 'typically stronger spring selling season has not yet materialized.'

LEN $43.43 -2.49% Link ...

Jane Fox : 3/27/2007 10:43:36 AM

TICKS just hit +800 so we may be close to a spot in which you could position yourself short.

Jane Fox : 3/27/2007 10:39:37 AM

Dateline MarketWAtch - In a speech released in China, Chicago Fed President Michael Moskow warned that it is too early to say that inflation is no longer a concern. Moskow noted that recent housing data have been mixed, but he insisted that inflation should not stay stubbornly high.

According to Moskow, high inflation is a bigger concern for the U.S. than slower economic growth.

And in a speech in Prague, Cleveland Fed President Sandra Pianalto said the central bank is monitoring inflation carefully because of the risk that price growth will not moderate as much as the bank had projected.

The Fed continues to see risks in "the inflation environment," she said.

Keene Little : 3/27/2007 10:37:56 AM

This NDX 30-min chart shows the intersecting trend lines that proved to be tough resistance yesterday, including the broken uptrend line from March 14th. This is a setup for a pullback to below yesterday's low. If we instead get only a small pullback followed by a push to a new high again, it could be a good rally so I'm watching for that setup. But so far it's looking like yesterday was a good setup for the short side. Link

Jane Fox : 3/27/2007 10:33:06 AM

WASHINGTON (MarketWatch) -- The Federal Reserve is concerned that borrowers of subprime mortgage loans may face "more difficulty" in the next one to two years, a Fed official said Tuesday.

In particular, those borrowers with recently originated adjustable-rate mortgages are likely to experience more delinquencies and foreclosures, said Sandra Braunstein, the director of the Fed's division of consumer and community affairs.

In prepared testimony for a House Financial Services subcommittee, Braunstein also said incentives for responsible subprime lenders need to be preserved so that access to credit can be maintained.

Tuesday's is the second hearing in less than a week about the subprime market, which has fallen into crisis as several lenders specializing in mortgages to buyers with lower credit scores have gone bust.

Marc Eckelberry : 3/27/2007 10:22:45 AM

NQ 1812 is key (50 dma).

Marc Eckelberry : 3/27/2007 10:25:39 AM

Techs are holing up the markets ( at least stopping a collapse), which is normally bullish. All will depend on oil prices and whether they hold up.

Jeff Bailey : 3/27/2007 10:18:25 AM

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

Keene Little : 3/27/2007 10:16:07 AM

After breaking its uptrend line from March 12th this SPX 30-min chart shows how bearish it looks now that it has retested that broken uptrend line and gave it a kiss goodbye. It would appear at this time that it could drop back down and potentially make a new low below yesterday's. Link

The question from there is whether the pullback will be completing a larger correction from last week's high, resulting in a new rally leg as per the green arrow, or if instead a decline from yesterday's high will be just the start of a much larger decline. So far it's looking like the short side is the right side.

Jane Fox : 3/27/2007 10:14:45 AM

*NYSE decliners outnumber advancers 21 to 8
* Nasdaq decliners outnumber advancers 17 to 8

Jane Fox : 3/27/2007 10:14:03 AM

NEW YORK (MarketWatch) -- Gold futures traded all but flat early Tuesday as crude-oil prices declined, although market observers say the continuing stand-off between Iran and Britain over 15 sailors in Iranian custody will likely spell support for safe-haven buying in the precious metal.

Gold for April delivery rose 40 cents at $664.30 an ounce on the New York Mercantile Exchange. On Monday, gold futures closed up about 1%, adding $6.60 an ounce.

"Market participants believe they will get a better sense of gold's direction once consumer confidence data are released and once they hear from Mr. Bernanke again regarding the state of the U.S. economy," said Jon Nadler, analyst at Kitco.com.

Jane Fox : 3/27/2007 10:11:08 AM

WASHINGTON (MarketWatch) -- Florida-based residential builder Lennar Corp said Tuesday that first-quarter profit tumbled more than 70% amid overall weakness in the U.S. housing market.

Lennar became the second builder in two days to report a sharp drop in profit, and the news highlights the growing backlog of unsold homes that was reported in government statistics Monday.

Underscoring that, Lennar (LEN) withdrew its previously stated 2007 target of meeting or topping 2006's earnings of $3.69 a share, andit didn't set a new goal because, it said, it hasn't seen housing prices stabilizing.

Lennar shares fell $1.31, or 2.9% to $42.23. Lennar reported first-quarter net earnings of $68.6 million, or 43 cents a share, for the three months ended Feb. 28, down 73% from the $258.1 million, or $1.58 a share, earned in the year-earlier quarter. Revenue overall dropped to $2.79 billion from $3.24 billion as revenue from home sales fell about 10% to $2.62 billion.

Keene Little : 3/27/2007 10:09:20 AM

Sure seems like someone is working hard to keep this market up.

Jane Fox : 3/27/2007 10:08:42 AM

WASHINGTON (MarketWatch) -- U.S. home prices continued to fall in January, with prices in 10 major cities now down 0.7% year-over-year, according to Standard & Poor's and MacroMarkets LLC, which released the January Case-Shiller price indexes on Tuesday.

The 10-city index is down 0.7% in the past year, the first year-over-year negative reading since 1996. The 20-city index is down 0.2% year-over-year. A year ago, prices were rising 15%.

Prices fell from December to January in 17 of the 20 cities; only Miami showed any price gains. Prices were flat in Charlotte, N.C., and Seattle. Prices were falling fastest in January in San Diego, down 1.7%, or a 22.4% annual rate. Prices dropped 1.1% in Los Angeles, or a 14% annual rate.

The 10-city index was down 0.8% in January, or an annual rate of 10%. The 20-city index was down 0.7% in January, or an 8.7% annual rate.

Jane Fox : 3/27/2007 10:07:25 AM

WASHINGTON (MarketWatch) - Shaken by a steady rise in gasoline prices and a weaker stock market, U.S. consumer confidence dropped in March for the first time in five months, the Conference Board reported Tuesday.

The consumer confidence index fell to 107.2 in March from a revised 111.2 in February.

Economists surveyed by MarketWatch were looking for a decline to about 108.6.

"Apprehension about the short-term future has suddenly cast a cloud over consumers' confidence," said Lynn Franco, director of the private research group's consumer research unit, in a statement. "Despite diminishing expectations, consumers' assessment of the present-day conditions remains steady and does not suggest a weakening in economic conditions." The present situation index rose slightly to 137.6 from 137.1 in February. It's the highest since August 2001.

Jeff Bailey : 3/27/2007 10:02:55 AM

10:00 Market Watch found at this Link

Jeff Bailey : 3/27/2007 10:00:09 AM

Simon Property Group (SPG) $110.70 -1.03% ... testing short-term upward trend from 03/05/07 to 3/14/07.

Keene Little : 3/27/2007 9:57:51 AM

Stay aware of some potential gyrations around the 10:00 reports.

Marc Eckelberry : 3/27/2007 9:51:45 AM

NYSE is very negative for a broad index.

Jane Fox : 3/27/2007 9:48:37 AM

If you missed that first drop, patience grasshopper, I believe you will get more opportunities. Just remember to stay on the short side.

Jane Fox : 3/27/2007 9:42:38 AM

Internals and the numbers are telling me to stay short and sell the rallies.

Keene Little : 3/27/2007 9:42:27 AM

We got some big spikes down that have clearly broken the small up-channels from yesterday. Now we'll see if the decline continues or if instead prices start to rally in another leg up as it works its way up towards the Fib targets. Bearishly it looks like the indices bounced up yesterday for a retest of their broken uptrend lines from March 12th and have now dropped sharply from those tests (kiss goodbye).

Jane Fox : 3/27/2007 9:39:04 AM

The only thing that would have the bears worried is the VIX. It opens mid range to its PDR but is making new daily highs.

Jane Fox : 3/27/2007 9:38:14 AM

AD line is a very bearish -1393 and of course AD volume is well under 0 and falling. TRIN at 1.37.

Jane Fox : 3/27/2007 9:25:08 AM

And the very bearish chart of the US $, which has the most influence over Gold. So all is well for my GLD long so far. Link

Jane Fox : 3/27/2007 9:23:56 AM

Here is your chart of crude and it looks like it's support is holding up as well. Link

Jane Fox : 3/27/2007 9:22:38 AM

Here is a daily chart of Gold and as you can see support is holding up so far. Of course, you need to take into consideration the $ and crude charts before you can get a true reading on this chart. Link

Jane Fox : 3/27/2007 9:18:48 AM

And here is ES's number chart. BTW the black horizontal lines are PDH and PDL, I always like to know where they are. Link

Jane Fox : 3/27/2007 9:17:10 AM

Here is YM's number chart. Its yearly open is at 12708 so below daily and weekly open (12570) it was a bearish +2. Link

Jane Fox : 3/27/2007 9:15:03 AM

Did I miss a long yesterday? Yes but the odds of getting a successful trade long yesterday were not in your favor and I like to play the odds.

Keene Little : 3/27/2007 9:14:18 AM

Yesterday the futures had pulled back from the cash close and now with them slightly in the red it looks like we could see the small up-channels from yesterday's lows get broken right away. Whether that leads to the start of another decline today or just a pullback is not clear. We'll have to see what the pullback looks like. Maybe a pullback followed by a post-10:00 rally to finish off the 5th wave up as I showed in the charts below. I'll be watching the 1st hour price action to help gauge where we are in the pattern.

Jane Fox : 3/27/2007 9:13:47 AM

Here is part of the reason I did not take a long yesterday. I will use ER as an example. In November of last year I went to a futures trading seminar in Las Vegas put on by the CME. I must admit I could not relate to most of the speakers but there were a few that used charts in the same way I did and one in particular used a number system that really intrigued me so I started watching it. The fellow that presented the system used it exclusively to trade and apparently was quite successful at it. However I looked at it more as another tool in my trading box and do not use it exclusively to trade but in conjunction with the internals.

This systems assigns a number to the yearly open (1), monthly open (2), weekly open (3) and the daily open(4). If price is at a +7 or greater then you stay long, +3 or less then you stay short. Yesterday ER's daily open and the weekly open were at 815.90 so below this number the number was +3 (monthly +2 and yearly +1) and was telling me to stay short. Link

But like I said I use this system in conjunction with the internals and I am sure you are probably really sick of me telling you stay short if the AD line and volume are under 0. Here is how the AD line and volume looked yesterday. Link

Jane Fox : 3/27/2007 8:58:55 AM

The overnight session was about as flat as it could get. There was a lower low at around 6:30EDT but the markets have recovered from it. If this kind of consolidation took place at daily highs then I would say we would probably see higher highs intraday but it didn't, it took place mid point in yesterday's range. I am suspecting we are in for another tough day of trading. Link

Jane Fox : 3/27/2007 8:53:00 AM

Economic reports for today include:

10:00a.m. Mar Conference Board Consumer Confidence. Expected: 108.0. Previous: 112.5.

10:00a.m. Mar Richmond Fed Manufacturing Index. Previous: -10.

These are biggies and you should be careful trading around them.

Market Monitor Archives