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OI Technical Staff : 4/27/2007 9:59:59 PM

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Jeff Bailey : 4/27/2007 9:42:25 PM

Closing Internals found at this Link

Jeff Bailey : 4/27/2007 9:29:37 PM

Closing US Market Watch found at this Link

Jeff Bailey : 4/27/2007 9:19:22 PM

ITB Components with some various price performance measures and fundamental measures via QCharts Link

Jeff Bailey : 4/27/2007 9:00:44 PM

ITB components now Link

Jeff Bailey : 4/27/2007 8:55:28 PM

Heck ... fudge the ITB around a little bit with a $0.25 box Link

Bit of a "low pole warning", and same spread triple at $38.25.

Jeff Bailey : 4/27/2007 8:52:20 PM

Wait just a minute ... didn't NVR Link show some strength this week at 80.9% retracement? Several weeks ago we noted it was the strongest/best performing iShares DJ US Home Construction (ITB) $37.07 -2.65% Link component.

Jeff Bailey : 4/27/2007 8:44:47 PM

8 kids? Well, you don't need one of them to chart the DJUSHB on 5-point box Link

Chart from Monday's Wrap Link

Gulp! That's two consecutive buy signals. If the "third time" is a charm, then the trade at 6645 is a spread triple top.

Jeff Bailey : 4/27/2007 8:41:08 PM

MBA's Weekly Application Data with Friday closes for DJUSHB at this Link

Jeff Bailey : 4/27/2007 8:37:30 PM

Interesting chat with a buddy of mine that just bought another house here in Denver less than 1 month ago.

He was notified this week that his 1st mortgage was sold to another mortgage company (Countrywide), but initial mortgage lender still held the 2nd.

In September, when I bought my house, I was notified in late December than my 2nd mortgage had been sold to CitiMortgage, but initial mortgage lender still held my 1st.

What I "learn" from this is that there still isn't a lot of liquidity for the second-mortgage market.

Long-time subscribers know my view on what a "house" is. From the perspective of risk management, a house is an illiquid asset. Usually, you can't press a mouse button and sell it.(Now you can with CME housing futures)

Yep, the BANK owns about 99% of my house. That's juuust fine right now. And if housing prices "shoot higher," the bank can't come and get it, as long as I make my monthly payment.

Jeff Bailey : 4/27/2007 8:13:21 PM

Yep! Last spring I ran into two turkey hunters in Northern Kansas. They were from Louisanna/Mississippi and seemingly ate and breathed the spring turkey season.

Turkey roosts, forest, about everything wiped out in what had been heavily populated turkey haunts.

Turkey needs a tree to roost in.

Jeff Bailey : 4/27/2007 8:09:42 PM

Keep an eye on the news though. I'd hate for a seasonal summer fire to eat up a bunch of lumber, have lumber futures surge higher, and lumber/housing traders assume signal for the builders.

Anyone think of a recent "natural disaster" that has lumber inventory so high?

Jeff Bailey : 4/27/2007 8:04:38 PM

Things will get real interesting one Sunday should one of the kids start pounding their fork on the table saying "buy, buy, get in there and buy!" While the other is saying "sell, sell, it hasn't confirmed!"

Wait for at least two of the kids to start pounding their fists on the table (silverware in hand) to take a position. Then add when #3 and #4 chime in the week's that follow.

That will liven up those Sunday dinners.

Jeff Bailey : 4/27/2007 7:59:46 PM

Hurry up Keene! Kid#4 and #3 are on the clock! ;)

Keene Little : 4/27/2007 7:54:49 PM

Good choice Jeff! I'm going to compare the chart of lumber to the home builders as one of my charts in this weekend's Wrap.

Jeff Bailey : 4/27/2007 7:57:32 PM

Keene will like this one for kid#4 ... How about November Lumber? Since the chart was in a column of X at yesterday's close, kid#4 asks "did it trade $266?" If not, then kid#4 asks "did it trade a 3-box reversal to $258?"

Today's 04/27/07 high was $264.50 and low was $261.60.

Qcharts' symbol is CME:lb07x

Here's Dorsey/Wright's PnF chart of November Lumber Link

Sunday Dinner Report from kid#4: Well folks, not much going on since my last report and that double bottom sell signal on 4/17/07 and spread tiple bottom sell signal the same day at $264. As I see it (pencil eraser now placed on chin), first sign of strength would be a trade at $268 where demand would exceed a prior level of demand. (Grinning with his/her analysis)... But the hammers could come out of the toolbox if this contract trades $276, a spread triple top buy signal above trend. For now, we'd better assess downside to the bearish vertical count of $244.

Turns to Kid#3 that's following the Nov'07 housing futures and asks ... "what are you seeing?"

Hopes sibling #3 doesn't have an answer and sleeps in the tent that evening.

Jeff Bailey : 4/27/2007 7:37:59 PM

Yes! Put a tent out in the backyard/garage, just like The Apprentice

Jeff Bailey : 4/27/2007 7:33:12 PM

CME Nov'07 Housing Chart ... 1-point box Link ... Here, print this out until the kids get back from the store.

This is what a 1-point box chart would look like from the data set you have.

If I had 3 kids, one would be charting Aug'07, another Nov'07 and the other Feb'08.

More than 3 kids? What city do you live close to? Put those kids to work, learning about how to chart supply (O) and demand (X).

Can't get a word out of them at the dinner table once a week? Here's your solution.

No report from kid #2 at Sunday supper? How about ... "no dessert for you!"

Keene Little : 4/27/2007 7:22:13 PM

Interesting news on revaluing the entire market based on AAPL. This kind of stuff is usually done at the tail end of a big move in a bull market when everyone comes out and tries to justify why the market is still undervalued. Very typical. I guess we're now in a new paradigm and old economy stocks should be ignored. Oh wait, we did that already in 2000. Didn't work out too well.

Jeff Bailey : 4/27/2007 7:16:26 PM

Listening to CNBC ... AAPL may be "key stock" ... talk about how AAPL's earnings may have analysts looking at TOTAL market as now undervalued, after being "fairly valued" prior to AAPL's earnings.

Jeff Bailey : 4/27/2007 7:11:32 PM

Answer to email: If possible! Here's a portion of the May'07 CME Housing futures and Aug'07 housing futures I try and keep track of, usually with just a Friday close. Link then the Nov'07 and Feb'08 Link

I'll try and post these each Friday evening. I'd probably suggest charting them on a 2-point box scale.

If building a chart for Nov'07, go ahead and start with an "X" at $212 for the Comp. and place 2 more above it to $216. See 2/13/07 of $217.80? That's NOT $218.00. On a 2-box chart, you'd currently need a price of $210 to get into O's (3-box reversal).

Not "noisy" enough? Then use a $1-box chart.

Send the kid to the grocery store tomorrow and get some graph paper! Make them walk with gasoline prices as they are.

Jeff Bailey : 4/27/2007 6:04:22 PM

Answer to email: Yes! ... Link and the probabilities of losses (Purdue University Study / Professor Davis)

One "rule" you may have heard regarding stops when your first bought/shorted a stock was the "10% rule."

Now you know the rest of the story.

Jeff Bailey : 4/27/2007 5:41:31 PM

4-years a little long to be making adjustments, but ties in with making sure trader/investor is constantly testing relationships, not trying to trade them when they are no long "true."

Jeff Bailey : 4/27/2007 5:39:30 PM

Excellent discussion with Kudlow/Angel taking place.

Why have things changed (CRB/10-year yield)?

Jeff Bailey : 4/27/2007 5:33:33 PM

Answer to email: Yes! ... Link to Federal Reserve Statistics on U.S. Money Supply.

Jeff Bailey : 4/27/2007 5:31:11 PM

Answer to email: Yes! ... Baker Huges Rig count page Link

Jeff Bailey : 4/27/2007 5:29:49 PM

Continuous Contract ($WTIC) Link ... Dorsey/Wright uses $0.50 for futures.

Jeff Bailey : 4/27/2007 5:23:43 PM

Answer to email: Yes! ... the StockCharts.com symbol for Continuous Unleaded ($GASO) Link ... Dorsey/Wright measures on $0.02 box scale for futures.

Jeff Bailey : 4/27/2007 5:08:24 PM

2007 "Dow Dogs" (update) with the other 20 components at this Link

Jeff Bailey : 4/27/2007 5:26:13 PM

Better check those "5-drts!" ... reviewing end of year observations, etc. Link

Jeff Bailey : 4/27/2007 5:24:06 PM

Answer to email: Yes! I do think most of the IRA captital should have been put to work my most mutual funds by now.

Should check mutual fund data flows and cash held to make sure.

Jeff Bailey : 4/27/2007 4:48:59 PM

HON +21.33%, CAT +20.27%, AA +19.93% and MRK +18.94% are year-to-date percentage gainers.

HD -4.21%, C -4.18%, JNJ -2.80% and AIG -2.12% are year-to-date percentage losers.

Does not consider quarterly dividends.

Jeff Bailey : 4/27/2007 4:38:12 PM

King for sure Keene.

Of the "top 10" weighted components, breadth positive 6:4. Two of the top 5 up 1.04% and 1.36%.

Biggest loser of of top 10 and 5 was down 0.25%.

Jeff Bailey : 4/27/2007 4:28:46 PM

BIX.X 399.86 -0.11% ... you know where it is.

Jeff Bailey : 4/27/2007 4:27:37 PM

Regional Bank Holdrs (RKH) $162.16 -0.19% ... still battles with 19.1% retracement and 2/27 short (2/23) of $162.05.

Keene Little : 4/27/2007 4:23:40 PM

I just did an analysis comparing Monday's opening prices with today's closing prices. Not surprisingly, all the indexes were up with the clear winner being the techs (NDX). RUT and NYA were very close to breakeven, even though they both spiked higher during the week. The Banks and the Transports lost ground. It's pretty obvious to me that the buying has been concentrated in the big caps (both techs and non-techs). That may be telling us something.

Thanks John, that confirms what we're thinking when we say the market appears to be getting defensive by jumping into the safetly of the big caps.

Keene Little : 4/27/2007 4:19:15 PM

Another green day for the DOW and another day it did it on negative breadth (only 12 stocks in the green). This is not a healthy rally. But price is king even if he's not wearing any clothes.

Jeff Bailey : 4/27/2007 4:14:54 PM

Kind'a crazy ... HD is one stock that I see a way "undervalued," and SPG a stock I see and "overvalued."

Charts/market sure don't seem to agree with that.

Jeff Bailey : 4/27/2007 4:12:23 PM

Home Depot (HD) $38.47 -1.33% Link ... not exactly "accurate" depiction of historical supply demand (StockCharts.com adjusts past price level based on stock dividend), but this is the one stock among Dow Indu. components not yet on a "buy signal."

Stock traded $44 in November of 2004, fell to $35 by April 2005, and hasn't seen $44.00 since.

Jeff Bailey : 4/27/2007 4:03:53 PM

Check out DE's bar chart from 02/21 and 2/22

Keene Little : 4/27/2007 4:03:26 PM

I try not to show too many possibilities for the wave counts because it gets too confusing. Plus it looks like I'm saying the market could go up or it could down, or it might go sideways instead. With that and $3 you go go buy a latte. But with the minimum pullbacks we're getting along the way it starts to make it very difficult to figure out which corrections are the "bigger" ones. That's when I rely even more on the trend lines as they often mark the ends of wave counts.

So, the correction over the past 2 days could be what's called a running correction--it corrects the previous rally but does it in an upward slope, typically found during very bullish rallies. What that potentially means is that instead of a larger pullback as I've been showing on the charts, such as this DOW 60-min, it could simply rally higher from here (light pink). I'll continue to say this is not a market to short, not yet. But it's also subject to failure at any time and therefore I can't recommend a long play. Link

Jeff Bailey : 4/27/2007 4:03:14 PM

Deere & Co. (DE) $112.20 -1.24% Link ...

Jeff Bailey : 4/27/2007 3:56:28 PM

Check out CMI's bar chart from 02/21 and 2/22

Jeff Bailey : 4/27/2007 3:56:06 PM

Cummins (CMI) $96.75 +12.51% Link ... after session high of $107.23.

Jeff Bailey : 4/27/2007 3:47:25 PM

Check out bar chart on CAT for 02/21 and 2/22.

Jeff Bailey : 4/27/2007 3:45:27 PM

Hmmm ... 10.18

Keene Little : 4/27/2007 3:44:06 PM

The short term pattern for gold (YG) shows we should get a minor new high to finish off its corrective bounce--an A-B-C move up from yesterday's low with equality at 685.50. The 10-dma, which did a good job supporting the rally during April, is currently just above 686 so that might get tagged. But the way the bounce started, with the overlap and a small triangle b-wave inside wave-A, it's telling me this is a correction and not the start of something bigger to the upside. Link

Jeff Bailey : 4/27/2007 3:43:32 PM

Before the close, checking the 02/22/07 MM Link to see where VIX.X was that day.

Jeff Bailey : 4/27/2007 3:39:18 PM

VIX.X 12.43 -2.81% ...

Jeff Bailey : 4/27/2007 3:27:38 PM

Keene ... OK ... wasn't sure if still short from QM $64.50. Just trying to get some input from the other side of the trade.

Where do you think shorts would call it quits if they don't get gapped?

Jeff Bailey : 4/27/2007 3:21:56 PM

Volumes look VERY light today.

Jeff Bailey : 4/27/2007 3:21:35 PM

03:00 Internals found at this Link

Jeff Bailey : 4/27/2007 3:18:54 PM

CRB Index (CRY) pressure building here with 50-day SMA support, 21-day resistance, 200-day still trending lower.

Jeff Bailey : 4/27/2007 3:14:39 PM

It's never as easy as it sounds ...

Jeff Bailey : 4/27/2007 3:13:40 PM

It's be too easy if CAT were $75.00 right now.

Jeff Bailey : 4/27/2007 3:12:40 PM

Potential "doji" on DIA's daily interval bar chart today. $131.21

Keene Little : 4/27/2007 3:08:49 PM

Jeff, it probably doesn't surprise you to hear me say I'm still bearish oil. USO is trying again to get back above its broken uptrend line from January but is just about to run into its downtrend line from July. As I mentioned yesterday, those two trend lines cross near 51.90 although the downtrend line is closer to 52.10 today. I highlighted MACD--if it rolls back over here, after the small bounce up to the zero line, it will be a sell signal. We should certainly have our answer in the next day or two. Link

Jeff Bailey : 4/27/2007 3:02:31 PM

03:00 Market Watch found at this Link

Keene Little : 4/27/2007 2:59:31 PM

After the sharp drop in XAU yesterday morning (and HUI.X) the index has gone flat. It looks like it's consolidating before another drop lower and that continues to support the idea that the metals will do the same.

Keene Little : 4/27/2007 2:54:06 PM

I agree Marc. I did and I know many others who have reported to me that they have. Can't buy it here and can't short it. I'm sitting this out and just watching now, in a combination of amazement and amusement. The longer it rallies now, the sadder will be the result for those who bought Cramer's hype to buy now.

Jeff Bailey : 4/27/2007 2:53:40 PM

Anyone still trading the gold strong / stock market strong trade?

Jeff Bailey : 4/27/2007 2:52:49 PM

Well ... maybe those 10:00 AM dip buys on YM are sign since Tuesday.

Jeff Bailey : 4/27/2007 2:51:43 PM

I've still not seen any sign of that Marc!

Jeff Bailey : 4/27/2007 2:51:00 PM

I'm not the one to ask "would you hold a QM07M short over the weekend" to.

My bullish bias would say "no."

But I'm not short.

Marc Eckelberry : 4/27/2007 2:49:50 PM

This latest rally should make the shorts throw in the towel.

Jeff Bailey : 4/27/2007 2:48:02 PM

RS chart of SPG vs SPY Link

Keene Little : 4/27/2007 2:46:26 PM

The 13167 Fib projection for the DOW, which is also the top of its parallel up-channel from last July, is not much higher at this point. It would certainly be a good place for the bulls to take a little snooze.

Keene Little : 4/27/2007 2:44:02 PM

For all the gruntin' and groanin' going on in the DOW today in its attempt to make it what, 19 out of 21 now?, all it's done is manage to wedge itself up into a corner. There's just nothing behind this but there's no selling either. Link

Jeff Bailey : 4/27/2007 2:43:30 PM

Simon Property Group (SPG) $117.30 +1.26% ... best levels of session here. MONTHLY 19.1% at $117.73

Keene Little : 4/27/2007 2:37:03 PM

Marc, I think we agree on the fundamentals for gold but I guess we disagree on the timing. I'm thinking a sharp drop this year and then the metal will really shine in 2008 and beyond.

Jeff Bailey : 4/27/2007 2:35:08 PM

BP $67.82 -0.29% ... WKLY S2 held this morning ... WKLY R1 $67.95 holding here.

Jeff Bailey : 4/27/2007 2:33:57 PM

COP $70.30 -0.60% ... WKLY S1 held this morning ... WEEKLY Pivot ($70.49)

Jeff Bailey : 4/27/2007 2:33:00 PM

XOM $80.62 +0.08% ... right at WEEKLY R1.

Jeff Bailey : 4/27/2007 2:32:25 PM

PetroChina (PTR) $115.62 -0.56% .... juuuust under WEEKLY Pivot ($115.76)

Jeff Bailey : 4/27/2007 2:31:18 PM

My feel, based on observation is that oil bears haven't given up. Not yet.

Keene Little : 4/27/2007 2:31:17 PM

As for silver (YI, July contract), it has now bounced back up for a potential retest of its broken uptrend line from March 5th. For July it's near 13.68 and it's just about there. It's a good place to try a short since you can keep your stop tight just above. That wouldn't be a H&S top forming would it (after testing the May 2006 high)? Link

Marc Eckelberry : 4/27/2007 2:29:23 PM

That can happen in a year, Keene. Right now, gold is bullish as it held 676 against all odds. Infaltion up, growth is slowing = stagflation. Thats good for gold. Add an equity rally and off we go, at least for now.

Jeff Bailey : 4/27/2007 2:29:06 PM

Boy ... I a thought for certain some shorts at my "right shoulder" in CL/QM had stopped by now.

Keene Little : 4/27/2007 2:22:42 PM

In April gold (YG) broke above its downtrend line from May 2006 through the February 2007 high. It then dropped back down through it yesterday. It bounced off its 50-dma and has now come back up to retest that trend line (at least I think it will be just a retest). Since I'm short gold I'm obviously hoping this little bounce will fail miserably. Two equal legs up in a larger correction off yesterday's low is at 685.50 so that's the potential upside target here. Link

The link that Marc provided about Jeremy Grantham's take on a global bubble supports my contention that the next wave down in the bear market cycle will take all asset classes with it, including precious metals. All asset classes have benefitted from easy money and all will suffer during the next credit crunch. At least that's the theory and we'll just have to wait for the conclusion of this movie to find out who the bear mauls.

Jane Fox : 4/27/2007 2:21:09 PM

VIX breaking its PDL is quite bullish. Link

Jeff Bailey : 4/27/2007 2:18:58 PM

SLV $134.50 +1.43% ...

Jeff Bailey : 4/27/2007 2:18:43 PM

GLD $67.50 +0.94% ...

Jeff Bailey : 4/27/2007 2:17:12 PM

USO Alert! $51.87 +1.82% ... "horizontal neckline" of 60-minute interval chart.

Jeff Bailey : 4/27/2007 2:16:30 PM

Now ... I'm not pulling anything over on our institutional trader and their computers. They've run these numbers too.

Jeff Bailey : 4/27/2007 2:12:02 PM

Now ... based on last year's EIA data, perhaps next week is a "key" week. See how refiners "cranked it up" on Total Gasoline.

As of Wednesday's EIA report, total gasoline stockpiles down 6.3 million barrels. Let's stay convervative (from a bull's view) and round it to 6 million.

To get back to "last year," I might assume that's equivalent to 12M barrels of oil needed.

Jane Fox : 4/27/2007 2:09:55 PM

Another day when the internals were telling me short but price thumbed its nose at me and took off. Getting really tired of this. I want normal back.

Jeff Bailey : 4/27/2007 2:05:28 PM

OK ... Let's say it takes roughly 2 barrels of oil, to then get 1 barrel of unleaded. That would be 50% and conservative if using California Energy Commission information.

Marc Eckelberry : 4/27/2007 2:03:38 PM

Cheney's money manager is raising a huge red flag for ALL asset classes worldwide: Link

Jeff Bailey : 4/27/2007 2:02:27 PM

OK ... now Crude Oil Stockpiles are building, but we also have an idea as to "why" based on news from refiners (fires, maintenance being extended), which is reflected in the total gasoline stockpile draws.

Jeff Bailey : 4/27/2007 1:59:57 PM

My EIA Weekly Crude Oil, Total Gasoline, Reform. Gasoline, Total Distillate, ULS Diesel and Kerosene-Type Jet Fuel Table at this Link

What One Barrel of Oil Yields Link

Keene Little : 4/27/2007 1:51:39 PM

The brokerage index (XBD) looks very close to finishing its bounce. The broken uptrend line from June is still holding it down but it's inching its way higher towards the 253.03 target (for two equal legs up in its bounce off the March 14 low). The pattern over the past week appears to be a small ascending wedge which fits for the ending move. Link

So we've got trend lines, equality in the bounce and now an ending pattern all coming together to call a high for the brokers very near here. From a very short perspective it looks like it could get a small pullback and then final high early next week.

Jane Fox : 4/27/2007 1:48:02 PM

Jeff the very basic thinking on the Gold/Oil relationship is that when Oil is down people believe inflation is down and there is no need for an inflation hedge like Gold. Of course the reverse is true.

Remember my cavaet, this is a very basic rationale and that the Gold/Oil relationship is not anywhere hear as strong as the Gold/$ relationship.

Jeff Bailey : 4/27/2007 1:44:27 PM

A bit surprised we weren't here at yesterday's close, if not 03:00 PM EDT.

Jeff Bailey : 4/27/2007 1:43:34 PM

Not with today's INDU component action.

Jane Fox : 4/27/2007 1:40:01 PM

Link

Jeff Bailey : 4/27/2007 1:40:00 PM

Keene ... you might well be the "determiner" between gold/oil relationship.

Jane Fox : 4/27/2007 1:37:15 PM

Unbelievable, YM is breaking its PDH. Am I the only one who thinks this is just a bit odd?

Jeff Bailey : 4/27/2007 1:34:43 PM

Slight bullish bias into the weekend if USO can hold it. Ditto for futures.

Jeff Bailey : 4/27/2007 1:34:03 PM

Either side of its WEEKLY R1 ($51.40) since 12:00 PM EDt.

Jeff Bailey : 4/27/2007 1:33:17 PM

USO $51.49 +1.08% ... back at extendsion of my descending neckline.

Keene Little : 4/27/2007 1:32:05 PM

Metals also got a little pop higher on that. The top of the flag pattern for gold is nearing 684.

Jeff Bailey : 4/27/2007 1:31:24 PM

June Gold (gc07m) PnF-er at this Link

Then GLD $0.40-box to match futures Link

Keene Little : 4/27/2007 1:31:00 PM

Nice buy program across the board just to wake everyone up.

Keene Little : 4/27/2007 1:20:46 PM

Equities are still holding their uptrends from April 12th, with NDX well above its trend line. No change--looks like a high level consolidation day today.

Jeff Bailey : 4/27/2007 1:18:58 PM

01:00 Internals found at this Link

Jeff Bailey : 4/27/2007 1:14:54 PM

Just takes more time to get the screen capture.

Jeff Bailey : 4/27/2007 1:14:27 PM

I'll follow with a June Gold then Jane.

Jane Fox : 4/27/2007 1:07:46 PM

Jeff the ETFS are the same but they still have to be traded (they use the futures but need to pick a particular contract) and there are management fees etc. so there are certainly differences.

The other thing is that USO has not been around long enough to use it effectively with weekly or monthly charts.

Jeff Bailey : 4/27/2007 1:06:23 PM

They're pretty much the same Jane, with exception of time premium/storage fees.

Jane Fox : 4/27/2007 1:04:41 PM

You were right on the money as early as last week on your VLO call. I got out of a leap I've been holding early today, because I missed the chance for another point yesterday when you made your exit call.

The chart sure looks like a pullback to at least the middle BB should occur but then again couldn't it just churn for a few days inside the upper and then move higher?

I'd like to get back in around 64 as you suggested might be possible but with gas prices climbing daily that opportunity might not arise.

So an elaboration on your post of a few minutes ago would be appreciated.
Thanks

Oh my gosh the pressure is on! :) I think a healthy move would be back to the lower band, which would probably break the support from April 13th highs. This upward channel has been in place now for 4 months and it is getting further and further from its 50EMA and you all know markets ALWAYS return to their 50EMA at some point. The MACD did not make a higher high yesterday telling me a further decline is your higher odds. If we do get a sideways move then maybe the 50EMA will come up to meet price but I would not be long here. Link

Jeff Bailey : 4/27/2007 1:03:28 PM

01:00 Market Watch found at this Link

Jeff Bailey : 4/27/2007 1:00:04 PM

USO's $1 box chart (gives some wider historical perspective than conventional $0.50) Link

GLD's $1 box chart Link

SLV's $2 box Link

Jane Fox : 4/27/2007 12:53:50 PM

I never use USO and GLD for TA just GC and CL, the big contracts, because those are the pure plays.

Jeff Bailey : 4/27/2007 12:53:04 PM

In fact, I know of at least 1, or 2 oil bulls that tried to buy the decline in oil based on gold's strength.

Jeff Bailey : 4/27/2007 12:52:16 PM

Jane: I'm not too certain of that when I look at a chart of USO and GLD.

Jeff Bailey : 4/27/2007 12:47:39 PM

Monitor the July futures PnF chart going forward.

Jeff Bailey : 4/27/2007 12:46:22 PM

For now, that cash set asside for >=$52.00

Jeff Bailey : 4/27/2007 12:45:27 PM

Bullish swing trade 1/4 position stop alert on the USO at $51.24 +0.58% ...

Jane Fox : 4/27/2007 12:40:29 PM

Jeff the other varible Gold traders need to keep in mind is Oil. Oil and Gold have a direct relationship and if you see a disconnect between Gold and the $ then you could look at Oil and sort of guess which one will win or lose however you may look at it.

Jane Fox : 4/27/2007 12:38:18 PM

VIX making new daily lows and AD volume hoveing around daily lows and see what happens - nadda!!!

Jeff Bailey : 4/27/2007 12:33:25 PM

This Week In Petroleum at this Link

Keene Little : 4/27/2007 12:31:04 PM

I'll be back in 30.

Jeff Bailey : 4/27/2007 12:29:21 PM

Round number conservative Let's use Gasoline = 51% of one barrel.

Remember, EIA data for Gasoline is in Barrels, not gallons.

Jeff Bailey : 4/27/2007 12:27:42 PM

One Barrel = 42 Gallons

Keene Little : 4/27/2007 12:27:21 PM

To add to Jane's and Jeff's discussion on the US dollar/gold question, the "3rd variable" as I see it is the historically high bearish sentiment on the US dollar (and high bullish sentiment on the euro), along with the very bullish sentiment on gold, and this while the dollar is pressing the bottom of its descending wedge pattern with bullish divergences. Link

This tells me smart money in the metals sees a rally in the dollar coming and they were therefore unloading their inventory to the bullish gold crowd. So gold was going sideways and then dropping even while the dollar was dropping a little further. I agreed with Jane--it would resolve itself and I think the drop in the metals shows which way it will resolve--the dollar will rally and the metals (and euro) will drop. That's obviously just an opinion about what's happening but it's the reason I've been doggedly trying to short the metals (which appear at the moment to possibly be forming a larger bear flag correction).

Jeff Bailey : 4/27/2007 12:26:44 PM

Petroleum Products Yielded from One Barrel of Crude Oil Link

Jeff Bailey : 4/27/2007 12:23:31 PM

Oil traders ... on item I'm working on near-term based on my technical analysis of late, is some further fundamentals.

1) How many barrels of unleaded in a barrel of oil?

With refinery outages creating bottleneck, what are implications into June expiration/delivery?

2) Is depletion in unleaded so great, that oil bids regardless, or USO ranges $50-$52 next several weeks?

Jeff Bailey : 4/27/2007 12:19:12 PM

Jane: OK. Thought there might be a "3rd variable" that might have been the key. Other than some gold stocks getting hit prior.

Jeff Bailey : 4/27/2007 12:16:54 PM

Bullish swing trade long raise stop on 1/4 position ... for the US Oil Fund (USO) $51.44 +0.98% ... to $51.24.

This is for the 04/09/07 position.

Jane Fox : 4/27/2007 12:09:56 PM

Jeff in response to your question about Gold and the $. I didn't put any significance into the disconnect between these two other than I knew it would sort itself out eventually (it always does) and either Gold or the $ would fall (or rally) while the other went the other way. Unfortunately I didn't know how it would play out.

Jeff Bailey : 4/27/2007 12:05:38 PM

CHEVRON 1Q NET UP 18%, HELPED BY SALE

DJ- Oil giant earns $4.72 billion, or $2.18 a share, which includes gain of $700 million on sale of Chevron's interest in Netherlands business. Excluding gain, Chevron earns $1.86 a share, beating analysts' view of $1.67. Revenue falls 13%.

CVX $77.60 -0.74% Link ...

Keene Little : 4/27/2007 12:05:25 PM

An interesting thing about the bullish projection for the RUT is that the rally will end around mid week next week, May 3rd being a good spot as I project the price pattern inside its wedge. I've been emailing back and forth with a reader (Joe) who has been sharing some information he dug up about a very large number of repos that are expiring on the same day--May 3rd.

Repos are one of the ways the Fed stuffs electron-induced money (that would be the Fed's printing press) into the monetary system, typically through their primary dealers, the ones I call the mega banks and their trading teams. If a lot of money will suddenly be drained from the system on May 3rd, which would happen if the Fed doesn't replace those expiring repos, then it could wreak some havoc on the market. If they do replace the repos then there could be a flood of treasuries hitting the market, depressing the bond market (and jacking up rates). Ah, the games the Fed is playing with our money.

Jane Fox : 4/27/2007 12:04:58 PM

Here is your proverbial battle, Vix to new daily lows but AD volume and line very bearish. This means any trade will not have follow through. Link

Jeff Bailey : 4/27/2007 12:03:26 PM

MERCK GETS NON-APPROVABLE LETTER FOR ARCOXIA

DJ- FDA rejects Merck's Arcoxia, a Vioxx-like drug designed to treat osteoarthritis, and says Merck would need to provide additional data to gain approval. Move was widely anticipated.

MRK $51.72 -1.35% Link ...

Jeff Bailey : 4/27/2007 12:01:23 PM

DJ- President Bush: War Bill Sends "Bad Message" To Iraqis, Enemy, Military

Keene Little : 4/27/2007 11:59:03 AM

The RUT has dropped down to its uptrend line from March 14th, which was tested this morning. It may drop a tad lower as part of an under-throw (to be met with an over-throw above) so be careful about chasing a break below that support line. Link

The bullish wave count calls for another a-b-c move up to finish the 5th wave. But as I mentioned yesterday, these ascending wedges can be a bear to figure out real time (remember the one for the DOW and SPX from November to February), hence the reason for the different bullish and bearish wave counts inside this wedge. But the bearish divergences continue to support the idea that we're closer to a top than to an explosion to the upside.

Jeff Bailey : 4/27/2007 11:56:27 AM

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

Jeff Bailey : 4/27/2007 11:47:36 AM

Jane! On Wednesday, you mentioned it was unusual to see dollar and gold strength, then on Thursday, gold got hit.

Any observations since then that uncover the dynamic?

Keene Little : 4/27/2007 11:47:17 AM

The short term patterns in the equity markets support the idea that we'll get another minor low for the pullback but the somewhat larger pattern over the past day looks like consolidation before heading higher again. If we do get another dip to a minor new low I'd look to buy it for a scalp long (I'd only look to scalp trades right now as it's risky either way on a short term basis).

Jane Fox : 4/27/2007 11:40:21 AM

Here is an updated chart of VLO. Depending on your timeframe I suggested getting out of long positions yesterday but it has not even retraced to the April 13th swing high. Very bullish chart. Link

Jeff Bailey : 4/27/2007 11:41:36 AM

CAT's high $74.09 ... right at WEEKLY R1 ($74.08). Will get new WEEKLY's after today's close. New MONTHLY's after Monday's close.

April MONTHLY R2 ($71.08)

Keene Little : 4/27/2007 11:39:12 AM

In fact this morning's bounce almost made it back up to that broken uptrend line for a kiss goodbye. Nice short play there.

Keene Little : 4/27/2007 11:37:50 AM

Jane, draw an uptrend line on that silver chart of yours--clean break of it yesterday. The bounce off the March low was a bear flag. Say goodbye (wink).

Jeff Bailey : 4/27/2007 11:35:39 AM

I've been stopped on WAG at $45.38.

Jane Fox : 4/27/2007 11:34:38 AM

Look at this confluence of fib projections on the Silver chart. Support is not only the 200EMA but the 50% retracement from the april 23rd highs and the 61.80% from the February highs. Link

Jeff Bailey : 4/27/2007 11:34:34 AM

USD/JPY 119.67 bid

Jeff Bailey : 4/27/2007 11:34:08 AM

I'm seeing EUR/USD bid $1.36109, but off low of 1.35877

Jeff Bailey : 4/27/2007 11:33:00 AM

Forex Currency Link

Jeff Bailey : 4/27/2007 11:31:48 AM

DJ Currency - Euro Sinks To $1.36 After Hitting New High As Dollar Rallies

Keene Little : 4/27/2007 11:30:54 AM

You're right Jane. Or we could be on Point-Counterpoint. That 50-dma was the reason for the bounce in gold. Bull trap ;-)

Jeff Bailey : 4/27/2007 11:30:20 AM

WAG's WEEKLY S1 right in here at $45.42.

Jane Fox : 4/27/2007 11:30:23 AM

BTW I believe hardly anything I read so when I read this article about which markets traded in sync with Gold I was, "Ya sure." However, I am glad I persisted because the author had the research to show it. I know you can make stats say anything but I see the $/Gold relationship every day, the Oil/Gold relationship most day (it is a weaker relationship) and have taken the Swiss Franc/Gold relationship on faith for I do not watch it.

Jeff Bailey : 4/27/2007 11:28:35 AM

Walgreen (WAG) $45.47 -0.78% ... if not hard stopped at low of day ($45.25), place stop at $45.39, but look for exit should WAG bounce back to WEEKLY Pivot ($45.99).

MM profiles officially stopped at $45.25.

Jane Fox : 4/27/2007 11:25:56 AM

Here is another reason I am bullish Gold, actually one of the main reasons. I read an article by a fellow who did research on the markets that traded in sync with gold and he found these three. Oil - direct, Swiss Franc - direct and US$ - indirect. Link

Jane Fox : 4/27/2007 11:23:24 AM

WE could be very entertaining.

Keene Little : 4/27/2007 11:23:21 AM

The euro is also taking a pretty good tumble right now. It would appear as though there was a stop run in the currencies last night.

Jane Fox : 4/27/2007 11:23:01 AM

Keene, I think they should have us on CNBC.

Jane Fox : 4/27/2007 11:22:45 AM

Battle of the gold positions. I show a very bullish chart here and a very good spot for a long and a very clear idea of where to put your stop. Link

Keene Little : 4/27/2007 11:20:26 AM

After topping out at 682.1, 0.30 higher than its Fib projection for two equal legs up in its bounce off yesterday's low, gold (YG) appears to be turning back down. It now takes a drop back below 678 (breaking as I type) to confirm the correction is probably over (or it could morph into a larger correction but it would still be a correction). If you shorted YG at that 681.90 target, lower your stop now to just above the high of the bounce.

Jeff Bailey : 4/27/2007 11:18:23 AM

11:00 Internals found at this Link

Jane Fox : 4/27/2007 11:17:50 AM

The Russell 2000 is the only market to turn red and is our weaker market. No major equity market is weak but I am speaking relatively. Gold is giving a very clear buy signal, as is silver. Notice the US$ just gave us a very clear sell signal as well. Link

Jane Fox : 4/27/2007 11:09:27 AM

TICKS just hit +1000. This is a dangerous market to short.

Jeff Bailey : 4/27/2007 11:02:03 AM

11:00 Market Watch found at this Link

Jeff Bailey : 4/27/2007 10:50:21 AM

Bullish swing trade call establish stop alert on the Caterpillar CAT Aug $65 Call (CAT-HM) to $71.70 in the underlying.

Jeff Bailey : 4/27/2007 10:45:59 AM

Bullish swing trade stop alert on the 200 shares of Walgreen (WAG) $45.25 -1.26% ...

Keene Little : 4/27/2007 10:43:44 AM

I've been talking a little about potential turn dates with next week being a potentially important one. A 40-week cycle finishes next week and the next Bradley turn date (astronomically based) is May 7th. But turn dates can also mean accleration dates and what I've depicted on the DOW's daily chart is a pullback into that date window and then another rally leg to finish a 5-wave count up from the March low.

I show the DOW topping out around the 13300 area but equality between the 1st and 5th waves would have the DOW shooting up closer to 13600 (assuming a pullback to 13000 first). If we're truly in a blow-off top I have no doubt about the market's ability to do that. Do not fight this trend, not yet.

Jeff Bailey : 4/27/2007 10:42:28 AM

Caterpillar (CAT) $74.02 +1.39% ... as it nears my initial $75 bull target, here's an updated Dorsey/Wright PnF chart that I've made some notes on. The "?" are how I envision trade going forward Link

BOTH the NYSE Bullish % and the MACHinery/Tools are "bull confirmed" status.

Keene Little : 4/27/2007 10:38:31 AM

The DOW is holding its steep and tight parallel up-channel from April 12th and could press a little higher. But the larger, less steep, up-channel for price action since the March low looks to be putting a lid on this. If price runs sideways/down out of the steeper channel (with a new daily low) then we'll have a good idea that at least a larger correction has started. Link

The daily chart shows upside potential to a Fib projection at 13167 (2nd leg up from the March low equal to 162% of the 1st leg up) which is also where the top of the up-channel from the March low meets the top of the even larger parallel up-channel for price action since last July. Link

Jeff Bailey : 4/27/2007 10:32:25 AM

Caterpillar (CAT) $74.00 +1.35% ... X gets the square. Not just a heavy equipment maker. Makes diesel engines too.

Jeff Bailey : 4/27/2007 10:28:23 AM

Cummins Inc. (CMI) $102.22 +18.87% Link ... has achieved its bullish vertical count $106.

Earnings Press Release Link

Jeff Bailey : 4/27/2007 10:20:45 AM

ESRX $95.37 -1.13% Link ...

Jeff Bailey : 4/27/2007 10:20:06 AM

CVS $36.36 -1.35% Link ...

Jeff Bailey : 4/27/2007 10:19:30 AM

RAD $6.23 -1.26% Link ...

Jeff Bailey : 4/27/2007 10:18:55 AM

WAG $45.45 -0.82% Link ...

Jeff Bailey : 4/27/2007 10:17:08 AM

Oregon Governor OKs Discount Rx Drug Expansion ... AP Story Link

Jeff Bailey : 4/27/2007 10:08:44 AM

GE Could Sell Its Entertainment, Real Estate and Financial Arms ... AP Story- Link

Jeff Bailey : 4/27/2007 10:03:36 AM

10:00 Market Watch found at this Link

Jeff Bailey : 4/27/2007 10:00:51 AM

General Electric (GE) $36.88 +2.90% ... hot early.

Jeff Bailey : 4/27/2007 9:58:50 AM

Broadcom (BRCM) $33.13 -4.90% Link ...

Earnings Press Release Link

Consensus was $0.27 on Revenue of $897.16M

Downgrade at UBS after firm upgraded on 1/25/07.

Jeff Bailey : 4/27/2007 9:51:23 AM

Microsoft (MSFT) $30.46 +4.67% Link ... 3-box reversal with today's trade at $30.00.

Jeff Bailey : 4/27/2007 9:50:00 AM

Simon Property Group (SPG) $116.21 +0.31% Link ...

Earnings Press Release Link

Consensus was $1.30 on Revenue of $813.72M

Keene Little : 4/27/2007 9:47:25 AM

The uptrend line for SPX from its April 12th low is currently just under 1488, which is also near Monday morning's high. That should provide support for at least a bounce. The move down here might even finish the little correction that started from Wednesday afternoon's high and be followed by another push to a new high. Link

Keene Little : 4/27/2007 9:31:20 AM

In gold's bounce off yesterday's low, two equal legs up is at 681.9 (for YG) so it'll be interesting to see if this turns into something more bullish or just a normal 3-wave corrective bounce.

Keene Little : 4/27/2007 9:23:55 AM

Considering how bullish this market has been I'm surprised we didn't get a rally in the equity futures from the weaker than expected GDP numbers. Slower growth should mean the Fed has more flexibility to lower rates. At least that's been the argument for the rally. Maybe we're in the beginning stages of a mood shift. The bad news of course is that we're experiencing inflation that's higher than the Fed's comfort level but growth that is sub-optimal. This is of course what stagflation is all about and I don't see any evidence to the contrary.

In the meantime the US dollar has retraced all of yesterday's bounce and then some--back down and either heading to new lows or testing them. But the metals have not made an attempt to rally back up near their highs so it's looking like a heads up that something's about to change. It still looks like a bottom is being pounded in for the dollar.

Jane Fox : 4/27/2007 9:19:41 AM

Notice how nicely the US$ fits into its Fib projections. This chart of course bolsters my contention you should be long Gold. Link

Jane Fox : 4/27/2007 9:13:34 AM

This would certainly be a nice spot for Gold to turn around, make a higher low and break through to new yearly highs. I will show the updated jtHMA chart and you will see that indeed the 60 minute has turned green. Link

Jane Fox : 4/27/2007 9:09:41 AM

Markets are recovering from their GDP drop. ES has even recovered its PDL.

Notice NQ and ER's overnight low were right at their respective PDLs. Do U think this could be support intraday? Link

Jane Fox : 4/27/2007 9:05:32 AM

The DOW has been our little energizer bunny of late and needs a healthy retracement just like all the rest. Notice the MACD is supporting this rally and is not telling us we will see an end anytime soon. Link

Jane Fox : 4/27/2007 9:01:08 AM

Same story for the SPX. A retracement back to the 23.60% fib level is a 30 point drop and a much more healthy drop would be back to the 38.20% level at 1445, a 50 pt drop. Could you imagine the squealing you would hear if the SPX dropped 50 pts? Link

Jane Fox : 4/27/2007 8:55:55 AM

Here is a daily chart of the Russell 2000, $RUT.X. This market made a swing low on March 5th and has been in a rally mode every since. It needs a take a breather just like all the other markets before it can resume a sustainable rally. A paltry retracement back to its 23.60% fib level is about a 15 point drop but a retracement to a much more healthy level, the 38.20% is about a 30 pt drop. Link

Jane Fox : 4/27/2007 8:48:49 AM

Gold doesn't react directly to economic reports but it does react to US$ which in turn does react to economic reports but as you can see Gold is in a little rally here with the US$ falling.

Crude has just broke its PDL. Link

Jane Fox : 4/27/2007 8:34:21 AM

Needless to say the market did not like the GDP data out at 8:30. So far ES is the only market to break its PDL but this is not setting up for the market to make new highs intraday. Link

Jane Fox : 4/27/2007 8:32:53 AM

WASHINGTON (MarketWatch) - Hit by rising energy prices and a weak housing market, the U.S. economy slowed to 1.3% real annualized growth in the first quarter, the weakest expansion in four years, the Commerce Department estimated Friday.

The first estimate of first-quarter real gross domestic product was lower than the 1.7% expected by economists surveyed by MarketWatch.

The economy has grown 2.1% in the past four quarters, the weakest real growth since the year ending in first quarter of 2003, when the economy was struggling to revive from a shallow recession.

The economy has expanded at less than its long-run potential of about 3% for three straight quarters: It grew 2.5% in the fourth quarter after 2% in the third quarter and 2.6% in the second quarter. Over time, growth at less than potential should reduce underlying inflationary pressures, the Federal Reserve has said.

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