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Keene Little : 4/12/2007 11:16:11 PM

CME and GOOG continue to present different patterns as they trade to the beat of a different drummer. Gold leaves me guessing a bit as to its short term pattern.

CME 60-min: Link
The downtrend line from January is currently near 556 and this one continues to look like it needs a pullback at least back to the 540 area.

GOOG 60-min: Link
Fib projections and retracements continue to point to 475-484 as a tough Fib wall of resistance. Its downtrend line from January is currently near 476.

Gold (June contract) 60-min: Link
The pullback in gold looks very choppy and gives me the feeling it's going to press a little higher again. These moves sometimes break down from what looks like a bull flag so that possibility remains. But if it pushes up again then a Fib target for the end of the move (green wave-1) is at 688.50 which is where I'd try one more time shorting it. Then assuming gold gets at least a deeper pullback I'll be watching for some clues as to whether it will be a 2nd wave correction to the rally or the start of a sharper decline instead.

Keene Little : 4/12/2007 11:15:47 PM

Re-posts of roadmap updates:

Except for the break of the uptrend lines from March 14th by some and not others, it would appear the 4 major indices we're following are now in synch, and they all look like they're close to finishing some ascending wedges. This brings into question what the market will do at Friday's open because I see the need for the market to push higher to perhaps a mid-day high on Friday. If the market sells off on the PPI news first then it should get reversed and head higher again (totally frustrating the bears), maybe even into the end of the day.

The EW pattern for these ascending wedges would look better if Thursday's lows are not violated until we've made new highs above the recent April highs. The bearish wave counts on these charts are my preferred counts but any higher than the key target levels (green) would have me at least turning short term bullish. Here are the 60-min roadmap updates:

DOW: Link
SPX: Link
NDX: Link
RUT: Link

The interesting thing about the setup as I see it on these charts is that because of the ascending wedges (if that's the correct interpreation), we can expect a fast and sharp breakdown from them and a relatively quick retracement of the March rally. This would occur during opex week which is when most participants are expecting exactly the opposite. It would also show that the Thursday/Friday prior to opex are the head fake days. Very interesting possibility here.

Keene Little : 4/12/2007 11:14:59 PM

Friday's pivot tables: Link and Link

OI Technical Staff : 4/12/2007 9:59:59 PM

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

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Jeff Bailey : 4/12/2007 8:43:41 PM

Lam Research (LRCX) $50.98 +1.47% ... chip-equipment maker edged higher to $51.56 after reporting Q3 earnings.

Jeff Bailey : 4/12/2007 8:40:36 PM

Apple to delay release of Leopard operating system

MarketWatch Story Link

AAPL went out at $92.17 -0.43% ... last tick in extended was $90.42.

Jeff Bailey : 4/12/2007 8:37:38 PM

CBS Fires Don Imus From Radio Show

CBS Corp. (CBS) $31.41 +1.35% ...

Jeff Bailey : 4/12/2007 8:31:08 PM

NYSE Summation Index ($NYSI) 20-point box chart Link ... 817.05. 800.00 on 20-point box size.

Jeff Bailey : 4/12/2007 8:28:58 PM

NASDAQ Summation ($NASI) 20-point box chart Link ... 11.02. 0.00 on 20-point box size.

Reduce the box size to 10 and it will add "noise" or bring in greater volatility. Reduce further to 5, more still.

Jeff Bailey : 4/12/2007 8:01:38 PM

Closing Internals found at this Link

Jeff Bailey : 4/12/2007 7:58:53 PM

Caution!: Using any type of RSI, Stochastic, MACD with the bullish % indicators can be harmful to your account.

USPIX $12.91 is currently down 12.00% from an 11/02/2006 benchmark.

Keene Little : 4/12/2007 7:31:34 PM

CME and GOOG continue to present different patterns as they trade to the beat of a different drummer. Gold leaves me guessing a bit as to its short term pattern.

CME 60-min: Link
The downtrend line from January is currently near 556 and this one continues to look like it needs a pullback at least back to the 540 area.

GOOG 60-min: Link
Fib projections and retracements continue to point to 475-484 as a tough Fib wall of resistance. Its downtrend line from January is currently near 476.

Gold (June contract) 60-min: Link
The pullback in gold looks very choppy and gives me the feeling it's going to press a little higher again. These moves sometimes break down from what looks like a bull flag so that possibility remains. But if it pushes up again then a Fib target for the end of the move (green wave-1) is at 688.50 which is where I'd try one more time shorting it. Then assuming gold gets at least a deeper pullback I'll be watching for some clues as to whether it will be a 2nd wave correction to the rally or the start of a sharper decline instead.

Keene Little : 4/12/2007 6:41:33 PM

Except for the break of the uptrend lines from March 14th by some and not others, it would appear the 4 major indices we're following are now in synch, and they all look like they're close to finishing some ascending wedges. This brings into question what the market will do at Friday's open because I see the need for the market to push higher to perhaps a mid-day high on Friday. If the market sells off on the PPI news first then it should get reversed and head higher again (totally frustrating the bears), maybe even into the end of the day.

The EW pattern for these ascending wedges would look better if Thursday's lows are not violated until we've made new highs above the recent April highs. The bearish wave counts on these charts are my preferred counts but any higher than the key target levels (green) would have me at least turning short term bullish. Here are the 60-min roadmap updates:

DOW: Link
SPX: Link
NDX: Link
RUT: Link

The interesting thing about the setup as I see it on these charts is that because of the ascending wedges (if that's the correct interpretation), we can expect a fast and sharp breakdown from them and a relatively quick retracement of the March rally. This would occur during opex week which is when most participants are expecting exactly the opposite. It would also show that the Thursday/Friday prior to opex are the head fake days. Very interesting possibility here.

Keene Little : 4/12/2007 5:15:42 PM

Friday's pivot tables: Link and Link

Keene Little : 4/12/2007 5:03:12 PM

I was working on some dollar charts (before Marc and I got into our friendly debate) to show an idea that says the dollar may be ready to bottom for a long while. For those of you who have been following my US dollar chart in the Market Wraps, this chart will look familiar (updated with today's price): Link As I've been explaining each week, I've been thinking the dollar is due a bounce but it would then lead to another leg down to the bottom of its longer term descending wedge, shown on this weekly chart: Link

Wave-e in the descending wedge is the unreliable move--it can do a throw-under or end short of the bottom of the wedge. It often goes to 62% of wave-c, the previous leg down. That's at 82.30 and today's low was 82.265. Bullish divergences suggest the selling pressure is waning. If, instead of a small bounce and then final low, as shown on the daily chart, this move down is completing the descending wedge then the next big move for the dollar will be a strong rally out of this.

If the more bullish case is true then it would have all kinds of ramifications--everything from making international companies less competitive overseas to a drop in commodity prices (including gold). In fact this supports my belief that gold will drop to $500 if not lower. Could be interesting in the next few months.

Marc Eckelberry : 4/12/2007 4:55:27 PM

By the way, I am long semis, so I am zeroing in on a sector. I think SMH will fill that gap and hit 36.20, my target. And I plan on selling NQ 1845/1847.

Keene Little : 4/12/2007 4:54:06 PM

No need to defend me Marc, but I always appreciate all the support I can get (wink).

Marc Eckelberry : 4/12/2007 4:53:32 PM

I am taking profits on these rallies and I do short them at times. My point was that buying the drop to 20 dma today before opex was the best trade because we are still in a bull and that means put selling works 80% of the time.

Marc Eckelberry : 4/12/2007 4:50:48 PM

I will say in Keene's defense, that BPNDX in March di not quite qualify as a washout, so it's coming. But QQQQ could be at 46 before the next big round of selling.

Marc Eckelberry : 4/12/2007 4:49:37 PM

In other words, shorting is fine, but it is a short term strategy as long we are in a bull market.

Keene Little : 4/12/2007 4:47:09 PM

Speaking of P/Es, which I don't track closely, much less use to trade, history is our guide and no bear market has completed until P/Es are back down near 7 or 8. Last I heard they're still up around 18-20 (for S&P). We have a long way to go in this bear market, which started from the 2000 high. The DOW's new high is bogus--in inflated dollars, the euro, gold, anything other than the depressed US dollar, the DOW is not even close to its previous high.

Marc Eckelberry : 4/12/2007 4:48:52 PM

I will worry though when BPNDX gets back above 70/75: Link just on a swing basis. In fact, I shorted the markets right at that 76 mark and I will probably start thinking that way when we cross that bridge. But that does not mean it will be a bear market. Look at the swings we have had in 4 years.

Jeff Bailey : 4/12/2007 4:44:58 PM

It's a buuuulllll market!

Jeff Bailey : 4/12/2007 4:44:04 PM

Don't forget Dorsey/Wright's bullish % indicators too Marc!

NYSE Bullish % reversed back up to "bull confirmed" on 04/03/07. S&P 500 on 04/09/07.

Marc Eckelberry : 4/12/2007 4:44:07 PM

And if you think the world will keel over, use stops, but keep buying dips until it oesn;t work. Heck, anyone who bought QQQQ on January 3rd is above water.

Jeff Bailey : 4/12/2007 4:42:17 PM

I was looking last night to get an updated P/E ratio for the S&P 500, but haven't seen on in awhile.

Marc Eckelberry : 4/12/2007 4:42:11 PM

The more I know, the more I realize that less is better. If traders keep it simple and buy a bull market and sell a bear market, they will make money. This is still a bull market as long as SPX 10 month MA holds.

Jeff Bailey : 4/12/2007 4:40:53 PM

I think SPG Link is overvalued. Just waiting for the MARKET to confirm.

SPG vs. SPY relative strength Link ... does reverse back lower by 3-boxes at today's close.

Marc Eckelberry : 4/12/2007 4:38:20 PM

Yes Jeff, I agree with you. Mea culpa. I did very well buying NVDA at 17, but I sure wish I had not bailed at 25.

Marc Eckelberry : 4/12/2007 4:36:55 PM

Keene, I don't mind debating, but it's the same debate I had in July 2006. I admittedly wavered from my bullishness in October, because I had never seen such a rally with zero pullback (I bought 1995 stock dips, but I was not much of a chartist then, which is why I made tons of money). Up is up. Down is down. Follow the money and I missed out so many times out of disbelief. Now I see the same set up, once again.

Jeff Bailey : 4/12/2007 4:36:50 PM

Anyone having viewed the MM back in September would agree that any debate over "valuations" is absurd.

;)

Jeff Bailey : 4/12/2007 4:33:47 PM

Large Block alert! ... 1,002,100 shares billed out in the iShares Russell 2000 (IWM) at/for $80.25.

Marc Eckelberry : 4/12/2007 4:33:31 PM

And the reason this bull market keeps rolling is because of all the traders who are stuck in the 2000 bear market and see Armageddon at every turn. I read this in 2003, 2004, 2005, 2006 and now. When will it be safe to buy this market? When it hits new highs? Was it safer to buy NQ 1802 with a 2 point stop today than buying NQ 1847 (my target)?

Keene Little : 4/12/2007 4:31:01 PM

No debate is absurd Marc unless you don't like debating.

Jeff Bailey : 4/12/2007 4:30:19 PM

Pacholder High Yield (PHF) $10.18 +0.79% ... SEC yield is 8.84%.

Marc Eckelberry : 4/12/2007 4:29:44 PM

Keene, once again we are getting into this silly argument about techs. It's valuation, plain and simple. Any sucker buying 60 p/e on CSCO in 2000 deserved what they got. That was EXACTLY a case of bears buying a top. It was not the bulls buying, it was the bears throwing in the towel and the crowd rushing to buy an extreme. Just looking at the COMP chart, we can see we are nowhere near an extreme. I think the debate is absurd.

Keene Little : 4/12/2007 4:29:25 PM

That's why b-wave rallies (which is what I believe the bounce off the March 14th low is) gets everyone bullish. They're called sucker waves for a reason since they will often retrace huge portions of the decline, even making minor new highs, and then boom, the trap door opens and wave-c down is a whoosh. I see the same thing setting up here.

Jeff Bailey : 4/12/2007 4:28:46 PM

May Nat. Gas (ng07k) settled up $0.069, or +0.88% at $7.924.

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

May Heating Oil (ho07k) settled up $0.0314, or 1.67% at $1.9061.

Jeff Bailey : 4/12/2007 4:26:35 PM

May Unleaded (rb07k) settled up $0.0331, or +1.53% at $2.1918.

Marc Eckelberry : 4/12/2007 4:26:13 PM

We had a brutal correction and now we are back above 61.8% on almost every index. I don't think funds ever get as complicated about charts as retail traders do. Until proven otherwise, this rally is more than corrective because it passed the 61.8% mark on NQ, ES, YM and ER. It IS a rally off March lows. The charts are bullish, I just try and find something bearish, I can't. Volume, maybe, but that is only recently and it is normal before earnings.

Jeff Bailey : 4/12/2007 4:25:21 PM

May Crude Oil (cl07k) settled up $1.84, or +2.97% at $63.85.

Keene Little : 4/12/2007 4:24:34 PM

Countering Marc's argument on the techs, I got into a lot of trouble in 2000 believing the exact same thing. I had come out of the semiconductor industry (after 15 years in it) and if anyone knew it I did. And that's what got me into trouble--I thought I knew the strength of the industry and that the stock market would soon "get it". It didn't of course and I learned a valuable (and costly) lesson--listen to the market and not what you think it should do.

Jeff Bailey : 4/12/2007 4:24:26 PM

Closing U.S. Market Watch at this Link

Keene Little : 4/12/2007 4:21:32 PM

While we're on the subject of yields, I haven't shown my weekly chart with my best EW guess as to where rates are headed. On the daily chart I showed a couple of downtrend lines that could be the end of the rally, or they could be just speed bumps on the way up to 5.4%-5.5% before finally setting a long decline back 3% (as the Fed panics and takes rates to zero in the U.S. version of ZIRP (Japan's Zero Interest Rate Policy). Link

This chart shows wave-A down from the 2000 high and I'm thinking we could be into the final leg up within an ascending wedge for wave-B (very typical b-wave pattern). This would be followed by a sharp drop down in wave-C (indicating a panic move by the Fed, not that they've been known to do such things). Lots of cycle studies point to 2011 as being the bottom so it fits.

Marc Eckelberry : 4/12/2007 4:16:51 PM

The last thing you should dump is techs. They are cheap and quite a few large semis have been telling us inventories are dropping and they are running new products in the channel. Demand is out there and techs have been coiling for months on the high semi inventory. That cycle is turning, like it does every 18 months.

Marc Eckelberry : 4/12/2007 4:13:39 PM

That's only 10% from here. And the more naysayers, the more upside risk.

Marc Eckelberry : 4/12/2007 4:12:13 PM

QQQQ will hit 50 before the year is over. Millions of consumers have been holding off on computer purchases waiting for Vista. Yes, Vista has not been a huge success, but the upgrade cycle will start hitting Q1 earnings and EXPLODING in Q2.

Keene Little : 4/12/2007 4:08:37 PM

This 10-year yield (TNX) daily chart shows why I think we could see a pop in the yield to perhaps the 4.78% area before getting a pullback. Link

Keene Little : 4/12/2007 4:05:08 PM

On the question about what bonds might do tomorrow, it's interesting that they're essentially flat today--on hold. But it's interesting that the quick drop in yields this morning (bounce in bonds) was reversed back to the flat line. Best guess on the bonds is for a sell off in those as well. But both bonds and stocks could see a reversal later in the day as the rally in both continues to push the market higher into Monday, maybe Tuesday, but probably not much higher. From there it could be trouble.

Marc Eckelberry : 4/12/2007 4:00:03 PM

Tran is back above 2006 highs. We are going to hit the disbelief stage of the rally. After that, bears will throw in the towel. Then I will think short. Bears always buy at the top.

Keene Little : 4/12/2007 3:55:29 PM

My official guess for tomorrow's reaction to the PPI numbers will be a sell-the-news event. PPI will come in higher than "expected" and people will be all worried about the Fed raising interest rates. Hellooo! Haven't they already been telling us that? Rallying into those numbers looks manipulated to me and without confirming volume. We've seen this too many times. I of course could be fooled (maybe someone leaked some good numbers) but I wouldn't bet on an upside reaction.

Jane Fox : 4/12/2007 3:53:34 PM

Economic Reports out tomorrow

8:30a.m. Feb Trade Balance. Expected: $60.5B. Previous: -$59.12B.

8:30a.m. March Producer Price Index. Expected: +0.8%. Previous: +1.3%.

8:30a.m. March PPI, Ex-Food & Energy. Expected: +0.2%. Previous: +0.4%.

10:00a.m. Mid-Apr Reuters/U Of Mich Sentiment Index. Expected: 88.0. Previous: 88.4.

Jane Fox : 4/12/2007 3:48:22 PM

The SPX 60 minute has gone green - for some reason that did not change on the SS - sorry.

Jane Fox : 4/12/2007 3:47:17 PM

Here is an updated jtHMA spreadsheet. I think it may be showing some good spots to get long using the $RUT, $SPX or the $DWC Link

Jeff Bailey : 4/12/2007 3:42:31 PM

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

Jeff Bailey : 4/12/2007 3:36:01 PM

????? ... HSBC Holdings (HBC) $90.00 +0.46%

Jeff Bailey : 4/12/2007 3:31:15 PM

Bullish swing trade(s) raise stop alert on both of the U.S. Oil Fund (USO) $51.57 +2.19% ... positions to $49.60.

Keene Little : 4/12/2007 3:24:30 PM

Paul asked what I thought stocks and bonds will do if the PPI report is good or bad. That depends on the market's mood. I say that somewhat facetiously but in fact it's true--how many times have we seen the market rally on good news one day and then tank on the same kind of good news another day? Most often market commentators will credit something for a market's move when in fact it probably had nothing to do with it.

So, having said that, I think the market is set up for disappointment. We saw it around the FOMC minutes even though everyone half awake knew what was in the report. Tomorrow we will get the PPI numbers and the market could be setting up to sell off on it. The market pundits will then blame the market's drop on scary PPI numbers when in fact the market would have already been ready for a drop and the PPI would be just the catalyst.

We see this all the time when the increase in oil is credited for a market rally (good for oil stocks) and literally the next day the increase in oil is blamed for the market's decline (bad for inflation). The very same reporter from Bloomberg recently did this. And he gets paid for his words of wisdom! OK, so do I but not nearly as much.

That's a long-winded answer to say I don't know (wink). I'll offer my opinion near the close based on what I see in the price pattern.

Jeff Bailey : 4/12/2007 3:23:57 PM

Forex's USD/JPY bar chart Link ...

Jeff Bailey : 4/12/2007 3:17:15 PM

Bank of the Ozarks (OZRK) $29.18 +4.55% ... upgraded at Cohen Bros to "buy" (see last night's MM @ 8:33:36 PM EDT)

Jeff Bailey : 4/12/2007 3:11:44 PM

03:00 Internals found at this Link

Marc Eckelberry : 4/12/2007 3:09:58 PM

As for banks, they are not liking the higher rates, but PPI could change that if it moderates from last month. It will be interesting.

Marc Eckelberry : 4/12/2007 3:10:55 PM

The Yen is still in the old Feb gap and that could be why the carry trade goes on. If we had rallied June JPY above 0.008500, I would think bulls would have backed off. But it seems as long as JPY stay in the gap, bulls will buy dips. Frankly, I have tried trading off Yen ticks and it is has not been that successful, except for scalps. Just buying the 20 DMA (and 50 DMA) for NQ did the trick for now. If a real uptrend develops for JPY, I would not trust a pullback.

Jeff Bailey : 4/12/2007 3:02:28 PM

03:00 Market Watch found at this Link

Keene Little : 4/12/2007 2:57:34 PM

I'm still seeing nothing, nada, that says the banks are bullish. Follow the money--the banks aren't gettin' any and the rallies in the broader market are on decreasing volume. I showed this chart of the NYSE and its volume in last night's Wrap and it's not bullish at all: Link

Now today's rally is on lower volume than yesterday's decline. Show me the volume and better performance in the banks and I'll turn more bullish. Until then, short the rallies (which could be a new high so stay aware of that possibility). Traders who have taken quick profits have made money either way. Buy and hold or sell and hold has not been a winning strategy as we chop around. I continue to believe we're in the environment where we will now get downside surprises instead of upside surprises.

Jane Fox : 4/12/2007 2:55:18 PM

My goodness gracious! Link

Jeff Bailey : 4/12/2007 2:54:52 PM

Heck ... probably should have bought the dip this morning if traders thought yen was a problem.

Jane Fox : 4/12/2007 2:54:06 PM

OIl is taking off now, QM at 63.80, which should certainly help raise the price of Gold.

Jeff Bailey : 4/12/2007 2:53:33 PM

USD/JPY 119.04 -0.29% ... nothing here that I can find as overly concerning (based on my prior observations)

Marc Eckelberry : 4/12/2007 2:50:49 PM

Big bounce at 20 DMA and that is all that matters for me, frankly. Last year's rally was very difficult because we never got pullbacks. Now the VIX is a little more volatile and we are getting great set ups.
I think QQQQ will get past 45 next week.

Keene Little : 4/12/2007 2:41:52 PM

Marc mentioned the low on the Thursdays prior to opex week have been the time to buy for the opex push but in fact the pattern has been the move and not the first low on that day. In other words we've usually seen a steep decline on Thursday, and often running into Friday, that then pulls the bears in to set up the short covering rally the following week.

That's not what we have going on today. Instead we're rallying out of the hole and it makes me wonder if instead the bulls are being sucked in this time, setting up a down week next week. The EW pattern supports this idea. It'll be interesting to see how the pattern plays out here.

And besides, what are we doing rallying into the PPI numbers? Makes me suspicious.

Jeff Bailey : 4/12/2007 2:37:03 PM

US Oil fund (USO) $51.68 +2.41% ... tears away from WEEKLY S1 and now DAILY R2. Weekly Pivot higher at $52.63.

Jeff Bailey : 4/12/2007 2:33:17 PM

CNOOC (CEO) $89.45 +1.72% ... post earnings high.

Jeff Bailey : 4/12/2007 2:32:12 PM

PetroChina (PTR) $116.78 +0.82% ... PTR-FD $4.10 x $4.40.

Jeff Bailey : 4/12/2007 2:29:43 PM

I'm probably MAX weight oil at this point in the MM profiles. However, those that may need an idea and like to SELL puts, I like the Sell NAKED PUT ... for the Sunoco SUN May $70 Puts (SUN-QN) at the bid of $1.30 with SUN $74.70

Marc Eckelberry : 4/12/2007 2:22:55 PM

I think bears are missing out on so much cash, always waiting for a top to short. Just buy dips until the trend changes and make money. We are not at the extremes we were in February, so I am not keen on trying to short all the time. Buy the dips.

Jeff Bailey : 4/12/2007 2:23:17 PM

That news out of VLO could be bullish for Sunoco (SUN) $74.67 +0.97% ... more of a sour crude refiner. Will have to pick up that slack if they can.

Jeff Bailey : 4/12/2007 2:17:54 PM

Me thinks we could have held those NAKED VLO Apr $57.50 Puts to "poof"

Closed'em out just prior to "crack attack" #2 in early April.

Jeff Bailey : 4/12/2007 2:14:47 PM

Valero McKee refinery seen slowed through 2007

Reuters Story Link

Marc Eckelberry : 4/12/2007 2:10:20 PM

I live for reversal days like this and great surf on top of it: Link

Jeff Bailey : 4/12/2007 2:10:19 PM

Not sure wher the Yen was trading this morning at 09:52:49. I've han problems with my Java software today.

Jeff Bailey : 4/12/2007 2:08:18 PM

SMH $34.58 +0.31% ... ran for WEEKLY R1 again. Session low was $34.20 today.

Marc Eckelberry : 4/12/2007 2:02:53 PM

There are just too many bears out there and you can't expect a reversal of an uptrend with such negative sentiment. Wall of worry indeed. This market looks poised for more gains especially the COMP. Ever since we clawed back above 2400 I have been feeling very bullish about techs. Maybe I am completely wrong, but that's my trader gut feeling.

Jeff Bailey : 4/12/2007 2:02:32 PM

USO and oil futures "should have" backfilled their morning gaps this morning (short-term downward trend), but they didn't.

Jeff Bailey : 4/12/2007 2:00:17 PM

US Oil Fund (USO) $51.33 +1.72% ... 15-minute interval chart with DAILY pivot levels at this Link

Marc Eckelberry : 4/12/2007 1:56:29 PM

I don't want to say I said so, but as usual, Thursday pre-opex is buy the dips. I took off after seeing NQ hold 1802 and enjoyed some double overhead surf in California, just to clear my mind from all the noise and let the trades breathe. I'm glad I did.

Jeff Bailey : 4/12/2007 1:55:20 PM

Gets the trade at DAILY R2 (51.29) ... chart is coming.

Jeff Bailey : 4/12/2007 1:51:40 PM

Yah, you see it now.

Jeff Bailey : 4/12/2007 1:48:50 PM

Pivot traders ... check out the USO with your DAILY pivot levels from QCharts turned on.

Probably the big level today is DAILY R2 at $51.29.

We haven't see a DAILY R2 trade since Thursday, 03/29/07.

Jeff Bailey : 4/12/2007 1:44:24 PM

Valero Energy (VLO) $68.12 +1.09% ... edges above yesterday's "doji" high.

Jane Fox : 4/12/2007 1:41:22 PM

Even though the day started out bearish, once these two got in sync you should have stayed on the long side. Link

Jeff Bailey : 4/12/2007 1:41:13 PM

Relative Strength Chart of SPG vs. SPY Link ... still in the range.

This month's Pivot looks important for SPG.

Jeff Bailey : 4/12/2007 1:39:00 PM

VIX.X 12.89 -4.44% ...

Jane Fox : 4/12/2007 1:38:26 PM

BOSTON (MarketWatch) -- Battered home-builder stocks got a much-needed lift Thursday after M/I Homes Inc. said that first-quarter orders recovered in its mid-Atlantic market and that its cancellation rate decreased.

Before the opening bell, the Columbus, Ohio-based company (MHO) announced that during the first quarter, new contracts for homes fell to 942 from 1,137 a year earlier. However, that order total is more than the previous two quarters combined, the company said.

In a statement, M/I Homes Chief Executive Robert H. Schottenstein said that most markets "remained difficult" for the three months ended March 31 as the Florida and Midwest areas saw order declines.

Jeff Bailey : 4/12/2007 1:38:07 PM

Simon Property Group's ... May $110 Puts (SPG-QB) getting some action today. 453 traded on the CBOE. OI as of last night was 482.

Level II all market makers has low/high of $3.20/$3.50 for this option. Uptick Vol 450 with DnTick Vol 3.

Keene Little : 4/12/2007 1:38:02 PM

The DOW is up 54 and the banks are still in the red. Tchh, tchh, not bullish. But it doesn't preclude the broader market from making a new high. It just can't be trusted that's all.

Jane Fox : 4/12/2007 1:35:48 PM

This certainly has been a much more bullish day than I expected but that is par for the course - the market does what it wants with no regard for me. Link

Keene Little : 4/12/2007 1:31:24 PM

Because of the correctiveness in the wave pattern in the pullback on NYSE, this one also supports the idea that we could see another rally leg to a minor new high. For the NYSE I have a Fib projection for a final 5th wave high (to equal the 1st wave in its move up from March 28th) at 9486.57. It's beginning to look more and more like we might have a setup for a down opex week. Link

Jeff Bailey : 4/12/2007 1:13:04 PM

01:00 Internals found at this Link

Jeff Bailey : 4/12/2007 1:03:11 PM

01:00 Market Watch found at this Link

Keene Little : 4/12/2007 12:59:33 PM

Another idea I'm considering is that we could get a minor new high as part of a developing b-wave correction, as shown on this DOW 120-min chart: Link

After the wave-A decline into the March 14th low, it's possible we're going to get an ascending wedge, labeled a-b-c-d-e, for wave-B. This is a very common pattern for b-waves. It calls for a minor new high above this week's, with perhaps an upside target in the 12650-12700 range, before heading back down in a strong wave-C that will get well below the March low. The negative divergence should continue at a new high if this occurs. A break of this morning's low would say even this short term bullish potential is negated.

Jane Fox : 4/12/2007 12:45:10 PM

NEW YORK (MarketWatch) -- Gold futures fell in volatile trading Thursday, as traders locked in gains, shrugging off weakness in the dollar and strength in crude-oil prices.

Gold for June delivery fell $1.40 at $680.30 an ounce on the New York Mercantile Exchange.

"Gold has shown signs of weakness today despite factors such as a weaker dollar and firmer oil, which would normally be supportive," said James Moore, analyst at TheBullionDesk.com.

Jeff Bailey : 4/12/2007 12:38:15 PM

Discosure: I currently hold bullish position in the USO.

Jeff Bailey : 4/12/2007 12:37:48 PM

Bullish swing trade round up to 1/2 position alert for the US Oil Fund (AMEX:USO) at the offer of $51.08 +1.22% ...

Jane Fox : 4/12/2007 12:30:57 PM

Gold is back to the same spot it was before it took its swan dive.

Keene Little : 4/12/2007 12:24:26 PM

Notice on the RUT chart I just posted that it has bounced back up to the previous 4th wave (wave-(iv) in the move down from Tuesday's high). This is a common target/resistance for a bounce so a turn back down here would be potentially bearish, confirmed with a break to a new low.

Jeff Bailey : 4/12/2007 12:21:23 PM

Trade Officials Set Dec Deadline To Complete Doha Round

AP- Top trade representatives from six key member-nations of the World Trade Organization on Thursday proposed a new year-end deadline to revive and complete negotiations on a treaty to further liberalize global commerce, a joint statement said.

The WTO's Doha round of negotiations, named after the capital of Qatar where the talks began in 2001, have been stalled over rich nations' refusal to slash farm subsidies - and poor countries' reluctance to grant greater access to their markets. The talks have missed several deadlines in the past, the last being December 2006.

The proposal for a new deadline came after negotiators from the U.S., European Union, Brazil and India - or the G-4 as they are known within the WTO - held formal talks for the first time since they failed to resolve differences and suspended the Doha round last July. Ministers from Australia and Japan also attended the meetings in New Delhi.

"We believe that by intensifying our work, we can reach convergence and thus contribute to concluding the round by the end of 2007," the statement said.

Keene Little : 4/12/2007 12:19:12 PM

By breaking below 804 the RUT confirmed the completion of the rally leg up from March 29th. The bigger question now is what is the decline from Tuesday's high. Unfortunately it looks corrective enough to call it a pullback that will lead to new highs. But if it was the 1st wave down in a new decline then the current bounce should be reversed and head for new lows. The RUT is currently approaching a 62% retracement (811.17) of its decline. This week's high and low are the key levels now. Link

Jeff Bailey : 4/12/2007 12:13:36 PM

DJ- EARNINGS PREVIEW

Computer Firms' 1Q Helped By Late Deals - Computer hardware companies like IBM and Sun Microsystems likely will meet expectations in the quarter, thanks to last minute deals. Meanwhile a price war raged between Intel and Advanced Micro Devices on the semiconductor front.

Jeff Bailey : 4/12/2007 12:09:35 PM

M/I HOMES 1Q CONTRACTS TUMBLE 17%

DJ- Home builder's new contracts drop 17% to 942 homes on weakness in Florida and Midwest. Homes delivered falls 15% to 704. But its cancellation rate declines to 25% from 63% in the 4Q, and its backlog is down 43% at 1,761 units.

MHO $26.61 +5.26% ...

Jeff Bailey : 4/12/2007 12:07:48 PM

MERRILL CEO SAYS SUBPRIME WOES EXAGGERATED

DJ- Merrill Lynch CEO O'Neal suggests that the state of the firm's newly acquired subprime mortgage unit isn't as dire as seen elsewhere in the troubled industry. He says reports have exaggerated and misunderstood nature of the business.

Jeff Bailey : 4/12/2007 12:07:08 PM

BUSINESS BAROMETER GIVES BACK PRIOR GAINS

DJ- Dow Jones-Bank of Tokyo-Mitsubishi-UFJ weekly business barometer decreases by 0.4% in the week ended March 31 following a 0.4% increase in the prior week.

Jeff Bailey : 4/12/2007 12:06:30 PM

IPSCO CONFIRMS IT IS IN TAKEOVER TALKS

DJ- Shares jump 10% as the maker of steel tubes and plates says it is in talk that might lead to the company's sale. Russian newspaper reported Evraz is considering a bid for the Canadian company.

IPS $143.30 +9.47% ...

Keene Little : 4/12/2007 12:05:26 PM

There are two things that would worry me about a rally today if I were bullish the stock market. One, if Thursday is to be the head fake day then will this set us up for a down opex week? Two, a rally into tomorrow's PPI numbers may be an effort by some to get as much cushion as possible for what could be some disappointingly high inflation numbers. This is of course all just speculation but something to think aobut.

Jeff Bailey : 4/12/2007 12:04:50 PM

RETAILERS' SALES STRONG ON EARLIER EASTER

DJ- Firms post big growth in March same-store sales and generally top analysts' expectations as results are helped by an earlier Easter. Wal-Mart posts better-than-expected 4% gain but CFO says meeting 1Q earnings expectations will be 'a challenge.' Outsize increases at upscale department stores are evidence of the luxury market's continued boom.

Jeff Bailey : 4/12/2007 11:59:49 AM

Dow Chemical Fires 2 Over Buyout Talks

AP Story Link

Jeff Bailey : 4/12/2007 11:58:00 AM

Nestle to Buy Gerber for $5.5 Billion ... AP Story Link

Jeff Bailey : 4/12/2007 11:51:46 AM

ConocoPhillips' CEO: Cost Of Limiting C02 Emissions 'Can Be Significant'

US May See $3/Gal Gasoline This Summer

Cost Pressures To Continue To Impact Earnings

COP $69.40 +0.24% ...

Jeff Bailey : 4/12/2007 11:43:50 AM

"Bad Tick" in May Copper (hg07k) $3.51 -1.95% ... to $3.96.

Keene Little : 4/12/2007 11:28:13 AM

I shorted YG at 686 on Tuesday's spike up--it looked like an ending move with a throw-over above its ascending wedge for the bounce pattern from its March low.

But here's what I don't like about being short gold, and the reason I've ratcheted my stop down to at least give me some latte money. The wave count supports the idea that we've got one more high coming and it Fibs out at 688.60 for another potential test of the top of its ascending wedge. If stopped out I would try one more time there. A break below 673.90 is needed to confirm the end of the wave count was Tuesday's high. Link

Jane Fox : 4/12/2007 11:22:34 AM

Keep in mind that the $ is falling so the odds are that any downward move is Gold will not have follow through. (smile)

Jane Fox : 4/12/2007 11:20:19 AM

Very nice downward move in Gold Keene. Where did you enter your YG short?

Keene Little : 4/12/2007 11:16:37 AM

With the quick drop in gold and silver, now's the time to lower stops to just above the recent bounce highs. So my stops are now at YG 684.80 (not much but it keeps it above the overnight high of 684.60) and YI 13.975 (overnight high was 13.970). These metals can move very fast and complete reversals of strong moves is very common so it's important to control your risk in these trades. You will find it's also easy to get whipsawed.

Jeff Bailey : 4/12/2007 11:14:22 AM

11:00 Internals found at this Link

Jane Fox : 4/12/2007 11:08:58 AM

I am still long GLD though.

Jane Fox : 4/12/2007 11:08:48 AM

Well my long YG position has been stopped out although the premise of the trade was sound it was just playing the odds and it didn't work out for me today.

Keene Little : 4/12/2007 11:04:41 AM

The move down from the high for the DOW is a funky count and actually looks corrective. I learned long ago to pretty much ignore the count inside a 1st wave down, especially on the shorter term charts, and it's possible the 1st wave down is now complete. That would mean an a-b-c bounce will be next for a 2nd wave correction, as labeled in dark red on the chart: Link

The bullish interpretation is that we've had a corrective pullback and now we're at the start of the next leg higher. The bulls need to rally this back above 12600 in which case I would abandon the short side in a hurry and join the bull party. Obviously the bulls do not want to see this drop back down to a new daily low, breaking its uptrend line in the process.

Jeff Bailey : 4/12/2007 11:01:58 AM

11:00 Market Watch found at this Link

Jane Fox : 4/12/2007 10:49:54 AM

Even though we had a TICK +1000 and the VIX to new daily lows the markets still feel heavy.

Jane Fox : 4/12/2007 10:49:09 AM

AD line as "improved" to -190.

Jane Fox : 4/12/2007 10:48:28 AM

VIX to new daily lows and AD volume to new daily highs and is now above 0.

Keene Little : 4/12/2007 10:47:38 AM

If you're short gold or silver with me, the current bounce looks very corrective. I expect lower in the metals. My stop is still above the recent highs for both, so 686 for gold (I lowered it from 687). Assuming we'll get the next leg down I'll then lower stops to just above the recent bounce highs.

I'm trying to keep risk very small until this gets going to the downside and then I'll give it some room to breathe. Right now the worrisome part of the move (if you're short)since the recent high is that it looks like it's bull flagging. That's why I want to keep lowering my stops to just above each bounce and then let it prove to me that it's a bull flag instead of getting ready for a big dumper.

Jane Fox : 4/12/2007 10:47:19 AM

TICKS +1000

Jeff Bailey : 4/12/2007 10:43:23 AM

Simon Property Group (SPG) $110.64 -1.16% ... sits on its MONTHLY Pivot ($110.45). WEEKLY S1 $111.22, WEEKLY S2 $108.96.

April's "Max Pain Theory" tabulated at $105.00 ($5 increments).

Jeff Bailey : 4/12/2007 10:40:22 AM

Sell Program Premium ... SPY $143.82

Keene Little : 4/12/2007 10:38:17 AM

Creating a parallel down-channel for NDX based on the trend line through its two lows shows price stalling at the top of it now. The bulls would like to see the rally continue of course, or a pullback to the downtrend line through yesterday afternoon's high for a retest would be another potential setup (just below 1800 now). The key level to break is yesterday's high near 1808. Link

The bears of course want to see it break down and crash through support near 1785 and then take out the key level at 1783. Gap close from April 3rd is just under 1773.

Jeff Bailey : 4/12/2007 10:32:44 AM

EIA Weekly Nat. Gas Storage Table at this Link ... Build of 23 Bcf

Jane Fox : 4/12/2007 10:26:48 AM

ES and ER are into no man's land now and YM is knocking on the door. Link

Keene Little : 4/12/2007 10:24:55 AM

The downtrend line for NDX from Wednesday morning's high is just under 1801 and was just tagged.

Jane Fox : 4/12/2007 10:24:49 AM

Keep your powder dry for now.

Jane Fox : 4/12/2007 10:24:33 AM

TICKS +1000 and VIX took a dive to new daily lows. The bulls are getting stronger but AD line and AD volume are still well below 0.

Keene Little : 4/12/2007 10:23:53 AM

Nice little impulsive rise off the low for NDX (not so for the others). We should get a pullback now and then another push higher as part of a larger a-b-c bounce I suspect.

Keene Little : 4/12/2007 10:15:23 AM

SPX now has a new small parallel down-channel to watch. The top of it, the downtrend line from Tuesday's high, is currently near 1441.60 and obviously dropping. It crosses its broken uptrend line from March 14th at 1440. Any rally back above 1445 would leave the decline as a corrective 3-wave pullback and therefore it's a key level for the bulls to recapture. The bearish wave count suggests price will break below the bottom of the channel and if it does then the next key level for the bears is 1424. Link

Jane Fox : 4/12/2007 10:13:44 AM

AD line at -899 is telling me to sell the rallies.

Jane Fox : 4/12/2007 10:12:03 AM

Although my US$ index is on a 20 minute delay I see it breaking its overnight low and should be good for the long YG position I took earlier. QM is also breaking to new daily highs. If you trade Gold this may be a good spot to try a long.

Jeff Bailey : 4/12/2007 10:10:59 AM

Sell Program Premium SPY $143.53

Jeff Bailey : 4/12/2007 10:10:31 AM

iShares Japan (EWJ) $14.60 -0.34% ... at put entry point Benchmark.

Jeff Bailey : 4/12/2007 10:07:23 AM

QCharts' symbol for Premium of S&P E-Mini Futures is INDEX:EPREM.X

Marc Eckelberry : 4/12/2007 10:07:20 AM

Risk below 1802 is 1790 gap close.

Marc Eckelberry : 4/12/2007 10:06:03 AM

Brave souls picked up NQ at 20 DMA (1802) and are now rewarded. Let's hope it lasts. Stops should be moved up to 1805.

Marc Eckelberry : 4/12/2007 10:04:59 AM

YM did a partial gap close (from early April) and is now back above 12500 and in the channel. NQ held 1802 and did not get into the gap. That could be it.

Jeff Bailey : 4/12/2007 10:02:53 AM

10:00 Market Watch found at this Link

Keene Little : 4/12/2007 10:02:00 AM

Approximate futures premium over cash (June futures):

YM -- +60
ES -- +8.50
NQ -- +15
ER -- +4.80

Jeff Bailey : 4/12/2007 9:56:42 AM

Max Pain Theory Values for April

DIA $124.00 ($1 increments)

SPY $143.00 ($1 increments)

OEX $650 (5-point increments)

QQQQ $43 ($1 increments)

SMH $35.00 ($2.50 increments)

Regional Bank HOLDRs (RKH) $165.00 ($5 increments)

IWM $80.00 ($1 increments)

Marc Eckelberry : 4/12/2007 9:52:49 AM

The problem is the Yen.

Marc Eckelberry : 4/12/2007 9:52:26 AM

If 1802 holds, that will be all she wrote ahead of opex. It's also QQQQ 43.95, just under 44 and it fits with put support.

Keene Little : 4/12/2007 9:51:12 AM

The DOW dropped down to support at its uptrend line at 12430. It's key level is 12416. It would be naturual to see the DOW get a bounce here but the different indices have similar support at different levels (or already broken) so it's tough to tell how important that uptrend support line will be.

Keene Little : 4/12/2007 9:49:56 AM

NDX and SPX are breaking their support levels. Next support for NDX is its uptrend line from March 14th, currently near 1785, just 2 points above its key level of 1783. A break below 1783 would confirm that the current pullback can not be part of a larger impulsive move up from March 14th. Big bounce back up as I type. But will it hold or is it just a stop run?

Marc Eckelberry : 4/12/2007 9:49:45 AM

NQ tests 1802 and holds. (20 dma).

Jane Fox : 4/12/2007 9:46:03 AM

VIX and AD volume are telling you "don't even thing long."

Jeff Bailey : 4/12/2007 9:44:54 AM

Apex Silver Mines (AMEX:SIL) $15.00 -1.31% ... back to heaviest May Call open interest.

Jane Fox : 4/12/2007 9:43:01 AM

AD line -950.

Jeff Bailey : 4/12/2007 9:42:26 AM

US Oil Fund (AMEX:USO) $51.14 +1.34% ... sticks its head above WEEKLY S1.

Marc Eckelberry : 4/12/2007 9:38:51 AM

All eyes on that one. The close is what matters.

Marc Eckelberry : 4/12/2007 9:39:16 AM

COMP 2455 is holding and that is bullish (61.8% 2007).

Jane Fox : 4/12/2007 9:35:32 AM

But on the other hand the VIX is climbing and that trumps the TRIN every time.

Marc Eckelberry : 4/12/2007 9:35:25 AM

That jump in oil and the Yen is too much headwind, at least for now.

Jane Fox : 4/12/2007 9:34:29 AM

Interestingly the TRIN opens below its PDL at 0.71 telling the bears to beware.

Jeff Bailey : 4/12/2007 9:34:23 AM

MedImmune Board OKs Looking for Buyer ... AP Story Link

Marc Eckelberry : 4/12/2007 9:34:21 AM

So far, NQ holds 50 DMA and YM stays in the channel. Will Thursday before opex prove once again to be the low?

Jane Fox : 4/12/2007 9:33:36 AM

AD Line is a bearish -450 and AD volume below 0.

Jeff Bailey : 4/12/2007 9:33:00 AM

MedImmune (MEDI) $41.57 +9.80% ... hot out of the gate.

Jane Fox : 4/12/2007 9:30:51 AM

Oil just tagged $63.00/bl.

Jane Fox : 4/12/2007 9:29:33 AM

Using the daily and weekly opens as your guide you would stay long above the weekly, short below the daily and flat in between. Link

Marc Eckelberry : 4/12/2007 9:29:12 AM

Good retail sales will be overshadowed by a rise in the Yen. NQ needs to hold 1802.

Keene Little : 4/12/2007 9:24:58 AM

Equity futures, especially for the DOW (YM), have risen in the last 90 minutes in what looks like an effort to get them back to the flat line. Watch for a quick reversal after the cash open. SPX 1435 will be an important support level to watch--its uptrend line from March 14th and its pullback low after the spike up on April 3rd. The DOW and RUT have already dropped into that area but SPX and NDX (barely) have held up a little better. If they also break yesterday's lows then we could have a bear party.

Jane Fox : 4/12/2007 9:23:10 AM

Heh Regan you have any more of these stocks we can all trade. This was a very good pick. Link

Jane Fox : 4/12/2007 9:21:57 AM

I suspect yesterday's bearishness will carry through today but I will let the internals guide my trading and not let my bias lead me down a garden path.

Jane Fox : 4/12/2007 9:17:42 AM

The US $ is downright bearish and there is a very good chance that its December 2006 lows will not hold and it will fall to the 127.20% level at 81.40. This of course, is very good news for my long GLD position. Link

Jane Fox : 4/12/2007 9:07:14 AM

Here is the jtHMA spreadsheet. Link

Jane Fox : 4/12/2007 9:00:46 AM

Gold traded within its PDR overnight but I suspect it will have upward pressure today because the $ broke its PDL and oil broke its PDH. Link

Jane Fox : 4/12/2007 8:55:10 AM

CHICAGO (MarketWatch) -- March proved to be a blowout month of sales for most of the nation's largest retailers with thanks to an early Easter and warm temperatures that broke records.

The early tally of a majority of the nation's top 52 chain stores reporting to Thomson Financial tracked a whopping 77% outpacing Wall Street's expectations.

Sales strength was found across the board with Wal-Mart, Target, Costco Wholesale, J.C. Penney, Nordstrom, American Eagle Outfitters and Limited Brands among those handily beating the average estimates of same-store sales, the industry's most important gauge of growth measured by receipts rung up at stores open longer than a year. Even Gap's numbers were unusually robust -- breaking that retailer's multi-year stretch of flat to negative same-store sales results.

Jane Fox : 4/12/2007 8:54:10 AM

Overnight all the large cap indexes tested their respective PDLs and so far they have all held. I predicted yesterday would be a hard day to trade and I was wrong, we had some very nice moves and yesterday proved to be a very good day for trading. Internals were telling you to "Don't even think long" and if you have a strategy that is able to identify a rally you could have sold every one of them and been successful. There were even a few of the rallies that you could have bot but I don't like trading against the trend. Link

Jane Fox : 4/12/2007 8:44:38 AM

WASHINGTON (MarketWatch) - First-time filings for state unemployment benefits rose by 19,000 in the week ending April 7 to 342,000, the highest in eight weeks, the Labor Department reported Thursday.

Initial jobless claims have swung wildly this winter and spring, driven by seasonal layoffs, severe weather and the timing of holidays. Few economists believe the underlying fundamentals of the labor market have changed significantly.

The more-reliable four-week average of new claims - which smoothes out distortions from events such as weather or holidays -- rose by 7,000 to 323,250, the highest in three weeks.

A Labor Department spokesman said the timing of spring breaks around the nation could be a factor in the recent increases in jobless claims. The seasonal adjustment techniques don't always adequately compensate for the timing of holidays, especially ones like Easter that come at a different time each year

Jane Fox : 4/12/2007 8:43:20 AM

WASHINGTON (MarketWatch) - Led by higher prices for petroleum and natural gas, prices of imported goods rose by 1.7% in March, the biggest gain in 10 months, the Labor Department reported Thursday.

The gain was far above the 0.6% expected by economists surveyed by MarketWatch.

Imported petroleum prices jumped 9%, the most since April 2006. Natural gas prices rose 4.7%. But outside of fuels, imported inflation was modest, rising 0.2%. Agricultural import prices fell after big gains in prior months.

Import prices were up 2.8% in the past 12 months, compared with a 1% gain in the 12 months ending in February.

Marc Eckelberry : 4/12/2007 7:33:19 AM

You should be out of any long trades for now, as bears get follow through overnight. This is wait and see if YM holds 12500, channel support. If indeed we put in the lows on Thursday, there will be time to get back in as Friday's PPI should keep everyone very nervous. My guess is that a test of QQQQ 44 is right around the corner. However, I still have my doubts we will get a massive April/May sell-off like last year. It would be too easy to repeat the same calendar pattern since everyone is expecting it.

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