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OI Technical Staff : 5/18/2007 9:59:59 PM

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Jeff Bailey : 5/18/2007 9:36:45 PM

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

Jeff Bailey : 5/18/2007 9:29:18 PM

Closing Internals found at this Link

Jeff Bailey : 5/18/2007 8:00:42 PM

PetroChina (PTR) ... Now its PnF chart, and I'm overlaying the retracement levels (bear and bull) from 07:43:23 bar chart Link

I think we can find at least one (1) call option where we're not risking $24 to a sell signal.

Jeff Bailey : 5/18/2007 7:43:23 PM

PetroChina (PTR) $131.15 -0.49% ... Here's a bar chart. In RED is what a bear is, or was trading. It "shouldn't have" gotten back above $122.45, but it did. See what happened on that re-test. The GREEN is what a bull may begin to use. Anchor the bottom, then drag up 100% to a bullish vertical count Link

Jeff Bailey : 5/18/2007 7:28:47 PM

PTR ... OK, from a point and figure chart, IF the BVC is indeed going to be $178, what needs to happen from the recent trade at $132 for the bullish vertical count column to be established?

Yes! It would need to reverse lower by 3-boxes to $126.00. Right? The bullish vertical count column is still under construction.

Jeff Bailey : 5/18/2007 7:17:58 PM

Good gravy! ... take an anchor point in PTR from the recent 03/05/07 low close (0%), then take the stop of that retracement to the currently under construction BVC of $178. Check out the 19.1% result.

Jeff Bailey : 5/18/2007 7:12:41 PM

Just for "fun", leave $90.63 attached, but drag up the $142.12, or 0% to the currently under construction bullish vertical count of $178.00.

Jeff Bailey : 5/18/2007 7:09:10 PM

PTR Traders! Do this! Take a retracement from the 06/13/06 low close of $90.63 up to the recent high close of $142.60 on 12/28/06.

Right now, that would have 19.1% at $132.28 and 38.2% at $122.45.

Somebody's trading that.

Jeff Bailey : 5/18/2007 6:45:17 PM

Closing U.S. Market Watch found at this Link

PINK are those areas/sectors/market caps that might benefit most from a weaker yuan.

DXY juuust a little perhaps, but biggest weights are euro/yen/pound

Jeff Bailey : 5/18/2007 6:28:27 PM

Just about "squared up" on YrNet% for INDU/SPX/OEX/NDX

Jeff Bailey : 5/18/2007 6:12:26 PM

US Market Watch 52-week highs!

NYSE Comp.
GSO.X (matches)

Jeff Bailey : 5/18/2007 6:18:17 PM

email response ... Here's the link to PTR posts Link

Today's "China float" needs some thinking, observation going forward, but RISK/REWARD from the PnF chart can still be judged.

Off the surface, I don't think the yuan float, if not rapid rise at least, would have major impact. The RISK for China in my opinion, is that a RAPID RISE in the yuan might hurt their exports, thus their more "rapid economic growth" vs. other parts of the world.

Right now, I think the latest figures showed they were #2 behind U.S. as largest user of oil.

But it is a give and take global economy. What the dollar/yuan has done to "hurt" U.S. exports, as well as other country's exports, but "help" China exports, may infact be a "wash."

Again, we have tests for that, which I began putting together in today's MM.

Jeff Bailey : 5/18/2007 5:38:27 PM

VIX.X 12.76 -5.55%

VXO.X 12.34 -7.7%

VXN.X 15.91 -5.01%

Jeff Bailey : 5/18/2007 5:40:07 PM

If today's OP-EX says anything, it is that investors/traders wanted to SAVE positions they had written calls on, not let them go.

Jeff Bailey : 5/18/2007 5:35:56 PM

Excellent point Jim. Yes, many of the small caps are less impacted by Op-Ex. Much less OI on individual names in that area. Easier to "push around" too.

Keene Little : 5/18/2007 5:35:32 PM

One point to note on the DOW--this week marks the 7th straight week of gains. As I've mentioned before, 7 seems to be a magic number for the market--reversals often happen after the 7th occurrence.

Keene Little : 5/18/2007 5:32:24 PM

Monday's pivot tables: Link and Link

As I was going through the weekly charts for the weekly values in the pivot spreadsheet I couldn't help but notice the YM weekly chart. Does this scare anyone besides me? Link As a comparison, here's the same chart for ER: Link

Jim Brown : 5/18/2007 5:30:48 PM

Since I trade the ER futures they are less impacted by OpEx games than the S&P. I exited at 824.70 at 3:30 because the chart was showing a lack of conviction for either direction. They closed at 824.80 45 min later and that confirmed my lack of lack of conviction view.

Jeff Bailey : 5/18/2007 5:34:11 PM

Whew! What a day. Spent some time getting some various benchmarks on the China news.

Now, you know me.

China's government saying they will not let yuan rise rapidly. That's "good news" in my opinion.

As long-time subscribers will know, it has been my belief that MARKETS dislike sharp moves in currencies, which can impact a multitude of various securities (bullish and bearish).

However, I tend to question things, and try to do it from an UNBIASED viewpoint.

Today, I grabbed several "screen captures" of global currencies, reviewed how some the of the U.S. BIG CAPS (which tend to be major exporters) have vastly outperformed the SMALL CAPS, which tend to benefit most from their larger-cap customer here in the U.S.

Now, there are some that don't believe the MARKET is forward looking. I however do, and would think some of the recent gains in the INDU/OEX and even broader SPX (large caps from narrow 30, to 100, to 500) are saying, or have said some things in recent weeks, where maybe, juuuust maybe a trader/commentator or two might also want to consider today's news out of China.

It's perhaps the "second step" China has taken to let their currency float. The "first step" I reported on several months ago, as did Rick Santelli, when the yuan first moved outside a long-term band with the dollar.

Baby steps, but steps in what many global trade watchers see as a needed step from China.

Jeff Bailey : 5/18/2007 5:20:23 PM

One can't be certain what any market maker says going into an expiration, but you just never know and must consider the "other side" of the trade.

Jeff Bailey : 5/18/2007 5:19:09 PM

Jim! That was probably a wise move. ES was 1,524.50 then.

Jeff Bailey : 5/18/2007 5:12:45 PM

HSI % Winners at this Link

Jeff Bailey : 5/18/2007 5:10:37 PM

Very important point made there on CNBC regarding today's yuan action and impact of other securities here in the U.S. regarding "interpretation" of U.S. monetary policy.

Jeff Bailey : 5/18/2007 5:05:14 PM

HSI's % Losers at this Link

Jeff Bailey : 5/18/2007 5:01:30 PM

HSI's most actives at this Link

Jeff Bailey : 5/18/2007 4:56:37 PM

China's Hang Seng Index ($HSI.X) Link closed 20,904.84.

Keene Little : 5/18/2007 4:52:54 PM

Same thing for the RUT. Now that we have a closing candle for the week, and a break below the H&S neckline from 2005, we've got essentially a sell signal on this. It doesn't mean sell on Monday but again this is normally a very good warning sign for bulls to heed. Link

Jim Brown : 5/18/2007 4:52:02 PM

Jeff, I went flat at 3:30 per my 3:32:36 post.

Jeff Bailey : 5/18/2007 4:51:31 PM

Hopefully the RightSide! ;)

Keene Little : 5/18/2007 4:50:28 PM

The RS (relative strength) of the COMP is still badly underperforming the SPX and this continues to warn us that the bullish enthusiasm is for large caps and not the tech stocks. Normally this is a good warning sign of a topping market. It's not a sell signal, just a warning. This is the updated chart from last Wednesday's Wrap. Link

Jeff Bailey : 5/18/2007 4:50:23 PM

Which side of the rise were you on Jim?

Keene Little : 5/18/2007 4:42:07 PM

CME is hanging out on top of its 200-dma but not looking like a pillar of strength here. It takes a break of its downtrend line, currently near 550 and confirmed with a break above 565, in order to get this more bullish. But it takes a break below its last low at 497 to confirm the next leg down is in progress instead of just a pullback that might close its gap. Link

GOOG is struggling with its broken uptrend line from August 2004, still. It has been hanging around this trend line since the beginning of March. Let go of it already! A break of the top of its down-channel, near 485, and above 493 puts it on a bullish path otherwise a break back below 457 would be bearish (just watch the 200-dma coming up to 452). Link

Jeff Bailey : 5/18/2007 4:40:47 PM

20 minute warning ... YM 13,600

Keene Little : 5/18/2007 4:26:40 PM

NDX is still a mess but nearing potential resistance by its downtrend line from May 9th, currently at 1900. What the larger pattern is is still a guess but a break above 1900 would be bullish for at leat a run probably up to 1915. Link

The RUT looks bullish with the break out from its descending wedge today. I suspect we'll see it rally at least to the 828 area where it will meet Fib and trend line resistance. A rally above 831 would likely mean a push up to at least 838-840. It now takes a break below 813 to put it back on a bearish path. Link

Jeff Bailey : 5/18/2007 4:25:04 PM

DIA $135.50

Jeff Bailey : 5/18/2007 4:24:25 PM

YM 13,599

Jeff Bailey : 5/18/2007 4:23:32 PM

For the WEEK ...

SPX +1.12%

RUT.X -0.71%

Since Tuesday evening.

SPX +1.43%

RUT.X +1.16% ...

Jim Brown : 5/18/2007 4:17:25 PM

Russell futures (ER) only gained a dime from the cash close to the futures close. Evidently traders had already found the level they wanted to see at the close. The S&P futures rose a whopping 75 cents from close to close.

Jeff Bailey : 5/18/2007 4:16:24 PM

Already re-writing Monday's Market Wrap!

Keene Little : 5/18/2007 4:16:17 PM

The high in the DOW as compared to the ne on Tuesday has a bearish divergence and as labeled in the dark red wave count, that fits as the 5th wave of the ascending wedge. I don't quite see the same thing in SPX so it's not a good enough sell signal here but it does warn of the potential that we could see a sell off start first thing next week. Notice too that the DOW is very close to a Fib projection at 13564 for the 5th wave of the move up from March. We're getting close.
DOW 60-min: Link
SPX 60-min: Link

Jeff Bailey : 5/18/2007 4:15:20 PM

China Automotive Systems (CAAS) $7.88 -3.90% ...

Jeff Bailey : 5/18/2007 4:14:44 PM

China Automotive targets U.S. automakers, exports ... Reuters Story Link

Jeff Bailey : 5/18/2007 4:12:55 PM

Toyota Motor (TM) $121.83 +0.27% ...

Jeff Bailey : 5/18/2007 4:11:21 PM

Any subscribers in China? If so, what's the cost of a GM car/truck today in China?

Jeff Bailey : 5/18/2007 4:09:58 PM

General Motors (GM) $31.45 -0.44% ... will be exercised to take possession of stock at $32.50 - $0.75 = $31.75. Using $31.75 as B asis going forward.

Jim Brown : 5/18/2007 4:09:40 PM

So far the Russell futures have gone nowhere since the close. Dead stop while the S&P futures rose.

Jeff Bailey : 5/18/2007 4:06:09 PM

9 minutes

Jeff Bailey : 5/18/2007 4:05:36 PM

DIA $135.46, YM 13,595 ... you got it! $135.50/13,600.

Jeff Bailey : 5/18/2007 4:00:26 PM

DIA $135.46 +0.66% ... stocks marked, but another 15-minutes here.

Jeff Bailey : 5/18/2007 3:59:35 PM

YM 13,591

Jeff Bailey : 5/18/2007 3:59:25 PM

VXO.X alert! 12.40 -7.25% ...

Keene Little : 5/18/2007 3:54:12 PM

Following the SPX pattern a little closer here, a break of the uptrend line from Tuesday will tell us when the current leg up is finished. Then I'm expecting another pullback (labeled wave-(iv) on the chart) to be followed by another push higher. By this projection the bulls will get their new SPX high (in US dollars only, not in gold or euros). The way this pattern is setting up it's sure looking like a double-top scenario against the 2000 high. Link

Jeff Bailey : 5/18/2007 3:52:55 PM

UTX $69.18 -0.27% ... may be another.

Jeff Bailey : 5/18/2007 3:52:38 PM

MO $69.94 +0.34% ... may be another.

Jeff Bailey : 5/18/2007 3:51:58 PM

C $54.94 +0.25% ... only INDU component I'm following close to a heavy strike.

Jeff Bailey : 5/18/2007 3:51:25 PM

IBM $107.97 +2.52% ...

Keene Little : 5/18/2007 3:50:53 PM

Jeff, for the benefit of the rest of the readers, if you're going to answer a reader's email question on the MM, please copy the question--your 3:42 post leaves me hanging for more. Thanks.

Jeff Bailey : 5/18/2007 3:50:27 PM

10-minute warning ... to 04:00

Jeff Bailey : 5/18/2007 3:48:33 PM

YM 13,584 ... went new high 13,590.

Jeff Bailey : 5/18/2007 3:48:08 PM

VXO.X 12.56 -6.05% ...

Jeff Bailey : 5/18/2007 3:42:50 PM

YM alert! 13,588

Jeff Bailey : 5/18/2007 3:42:08 PM

email response ... Yes! But it is of little help at this point. However, today may be "the turning" point. USD/CNY cross rate Link

Jeff Bailey : 5/18/2007 3:33:51 PM

YM 13,582 ...

Jim Brown : 5/18/2007 3:32:36 PM

Volume on the futures contracts has slowed significantly over the last 20 min from extremely heavy between 2-3pm. It appears nobody has the conviction to bet on the direction into the close and are content to watch until that direction appears. I am starting to lean toward an upside bias into the close. I am also going flat until a closing direction appears.

Jeff Bailey : 5/18/2007 3:30:58 PM

YM 13,573 ... in the upper-end of today's range. 30 minutes until stock cash session closes. 45-minutes for DIA.

Keene Little : 5/18/2007 3:28:19 PM

Interestingly, the oil stocks (OIX) have reached potential resistance at the same time as oil is hitting resistance--today's rally has taken the index up to the top of its parallel up-channel from October 2005, which is where price has turned back down each time it's been touched in the past. Link

At the same time it's completing a 5-wave move up with the new highs being met with bearish divergence. This pattern calls for at least a pullback to correct the rally from March. More bearishly this move up completes the rally from October 2005.

Jeff Bailey : 5/18/2007 3:24:22 PM

You can perhaps see the "pressure cooker" blowing to the upside in today's NYSE NH/NL indications. The NYSE has been the stronger of the two, and into today's expiration, the top (NH) begin to ramp again.

Jeff Bailey : 5/18/2007 3:23:07 PM

03:00 Internals found at this Link

Keene Little : 5/18/2007 3:22:27 PM

Just looking at USO also. Today's rally took it up to its downtrend line from July 2006 and its 50-dma. Today's candlestick looks like a little shooting star at resistance and is therefore a warning of a potential reversal. MACD has not made it above the zero line yet, also bearish. If it can break today's high it will be a confirmed break of its downtrend line but until then this looks like a setup for a short play for next week. Link

Jeff Bailey : 5/18/2007 3:19:24 PM

I should also caution equity futures longs at the cash session close.

We could have also seen the need hedge to get long this market, in order to hedge the sideways NAKED call trade, trading futures long in order to hedge the incorrect bet of selling calls.

Bottom Line is to assess the possibility of a "presure cooker" relief when cash session closes.

Jeff Bailey : 5/18/2007 3:14:16 PM

Ditto USO $50.18 +0.03% with $50 as a mid-point.

Jeff Bailey : 5/18/2007 3:13:30 PM

That HAS to be tied with oil. CRB Index (CRY) has tended to see 313 serve as some type of gravitational point since February.

Jeff Bailey : 5/18/2007 3:12:15 PM

Good gravy ... I've seen enough, to know I've seen too much. CRB 313.13

Jim Brown : 5/18/2007 3:09:43 PM

I am short the ER again from 825 so we will see what the last hour and post close brings.

Keene Little : 5/18/2007 3:09:01 PM

I was just thinking the same thing Jim.

Jim Brown : 5/18/2007 3:07:55 PM

Jeff, don't you think that it is possible that OpEx has kept the upward pressure on the futures during the day and once the cash market closes that support will cease?

Jeff Bailey : 5/18/2007 3:06:38 PM

QQQQ $46.53 +0.43% ...

Jeff Bailey : 5/18/2007 3:06:18 PM

DIA $135.18 +0.45% ...

Jeff Bailey : 5/18/2007 3:05:55 PM

SPY $152.21 +0.60% ...

Jeff Bailey : 5/18/2007 3:05:26 PM

I would caution equity futures shorts of being short when the cash session closes.

It would have to be my analysis, based on "Max Pain" theory that major indices may have been "held back" to try and keep things in check the past couple of weeks. If so, then once cash session is closed, overhead supply becomes limited should near-term shorts cover.

Jeff Bailey : 5/18/2007 3:02:23 PM

03:00 Market Watch found at this Link

Keene Little : 5/18/2007 3:02:02 PM

One of the things most traders and analysts are doing today is comparing price patterns and expectations against what has happened in the market since 1980. This has been a period of a strong bull market. Bull and bear markets cycles tend to last about 18 years, which means the last one ended around 2000 (and the new DOW high is NOT a new high when measured in anything other than the US dollar).

Most people trading or analyzing today have only experienced a bull market and that's what they're using as their reference point. I think we need to go back before 1982 to get some better ideas for what could play out next.

Jeff Bailey : 5/18/2007 2:58:32 PM

Commodities Comex Copper Bounces Slightly From Recent Losses

DJ (partial)- Copper futures managed a modest gain Friday as traders covered and took profits on short positions, analysts said.

The uptick came despite news of a large build in Shanghai Futures Exchange inventories and a rise in Chinese interest rates.

The most-active July copper contract rose 1.70 cents to settle at $3.3235 per pound on the Comex division of the New York Mercantile Exchange.

The contract fell 11.50 and 11.60 cents the last two days, in large part on worries Chinese demand might slow after being strong during the first few months of the year. Many analysts were looking for once-a-week inventory data from the Shanghai Futures Exchange to rise, which it did on Friday by 14,287 metric tons to 90,556.

"I suspect it's a case where people went overboard on the short side of things, and things stabilized a little bit," said Bart Melek, global commodity strategist with BMO Capital Markets. "They probably went a little short yesterday and there was some covering today."

He commented that while inventories have risen in the country lately, consumption of the metal appears to remain strong. Meanwhile, economic growth in Europe remains decent.

Mike Zarembski, futures analyst with XPRESSTRADE, said the market already expected some of the bearish news it got, such as higher Shanghai inventories and the Chinese hike.

Jeff Bailey : 5/18/2007 2:54:07 PM

Peru's Central Bank Intervenes To Buy $240 Million

Jeff Bailey : 5/18/2007 2:52:51 PM

DJ $52.81 -0.82% ... all over the map today. Now off session high of $54.48.

Keene Little : 5/18/2007 2:47:39 PM

If we're heading into a period of stagflation, which I believe to have a better than even chance of happening, then higher interest rates and lower stock prices will result. Just review the 1970's to see how the stock market fared (not well). Link

Jeff Bailey : 5/18/2007 2:42:19 PM

VXO.X 12.85 ... just off low of 12.56. DAILY R1 right in here at 12.79. Weekly S1 12.23 untested this week.

Jeff Bailey : 5/18/2007 2:40:51 PM

YM 13,569 ... 38.2% of day's range.

Keene Little : 5/18/2007 2:40:26 PM

The 10-year yield continues to break up and away from its broken downtrend line from last July (same time the stock market took off). Higher interest rates will hurt our economy but you wouldn't know it by the bulls who are responding to the siren called SPX 1527 (March 2000 closing high). The break above 4.78% is bullish for yield (bearish for bonds). The wave count calls the rally in yields just the beginning of a strong move to come in a 3rd wave. This Will catch up with the equity market. It's just a matter of when. Link

Jeff Bailey : 5/18/2007 2:37:58 PM

I think today's news out of China has something to do with Treasuries.

Jeff Bailey : 5/18/2007 2:36:36 PM

email response ... No! It doesn't make sense that Treasuries would be selling off it the market is "defensive." Of U.S. asset classes, Treasuries probably the "safest."

Jeff Bailey : 5/18/2007 2:33:06 PM

YM long stop alert 13,570

Jane Fox : 5/18/2007 2:32:52 PM

McMillan's weekly commentary. - This market just keeps rolling along -- like "Ol' Man River." We have stated several times that it has the appearance of under invested traders (or shorts) trying to catch up to this juggernaut. That still seems to be the case. It's hard to imagine that the short-lived, but very sharp decline, at the end of February scared so many people out of their longs -- but it apparently did. And to this date, many of them haven't gotten completely back in yet. Of course, about the time they do, the party will be over -- but that's a subject for a later date.

$SPX has now made new 6-plus year highs again. It certainly seems to have its sight set on two targets: 1) the closing high of 1527, and 2) its all-time intraday high of 1552 -- both set on the same day back in 2000. We expect those to be exceeded shortly.

As an aside, one may wonder why $SPX has not been able to make new all-time highs, like the Dow and many small-cap indices have. The answer to that question lies in the fact that Standard & Poors Corp. inserted a bunch of high-tech issues into $SPX when it needed replacements back in 1999 and 2000. As a result, the index underperformed badly (although I'm sure their intention was for it to outperform). Currently, there are 8 $SPX stocks that will need to be replaced soon, since they are being taken over. Hopefully, S&P Corp. will make more judicious choices this time, rather than using the venerable index to try to "play the market" as it did at the turn of the century.

In any case, as long as $SPX remains above its upward sloping trend line, the bullish case is intact. That trend line is currently at 1500

The equity-only put-call ratios continue to be bullish (see charts above). They have fallen rather sharply since their precise buy signals at the beginning of April, and now they are near the bottom of their charts. I suppose we could say they're overbought at those levels, but we wouldn't venture beyond that. Just because recent sell signals occurred at about these levels on the put-call chart doesn't mean that the next one will. No, they will only turn bearish if they roll over and begin to trend higher.

Market breadth has been the least bullish indicator -- continuing a pattern that has existed for nearly a year now. In fact, both breadth oscillators recently gave sell signals, although we did not act upon them. We view the breadth oscillators as confirming signals at best, and would not act on them alone. But perhaps the fact that breadth was so weak even though $SPX and the Dow kept on plodding higher means that an internal correction took place. The negative breadth readings certainly alleviated the overbought conditions that had existed a couple of weeks ago, and perhaps the entire market has likewise been relieved of being overbought. If so, that's a bullish interpretation of the action in breadth.

Finally, the volatility indices ($VIX and $VXO) have edged higher -- nearing the 14 level at times. As discussed in the column on volatility (page 12), this is not really bearish. In fact, it may just be a sign that the overall market is going to be more volatile, even while the market is rising. This last happened in the late 1990's.

In summary, we remain bullish. Except for the occasional weak sell signal from breadth, none of our indicators has even remotely seemed bearish. We will respect that and continue to ride the trend.

Keene Little : 5/18/2007 2:30:33 PM

I think gold (GLD) has at least one more leg down before a larger bounce sets up. But the bullish divergence at the last low says I need to watch this carefully for a potential break of its downtrend, currently near 65.85. If that happens we'd probably see GLD head up for a test of its broken uptrend line from October, perhaps back up to around 66.50. Link

Jeff Bailey : 5/18/2007 2:23:01 PM

YM 13,580 ... tapped DAILY R2 (13,586) yet again.

Jeff Bailey : 5/18/2007 2:19:38 PM

YM long raise stop alert ... to 13,570.

YM 13,583

Jane Fox : 5/18/2007 2:18:48 PM

$RUT has given us a very clear idea of its support. Link

Keene Little : 5/18/2007 2:18:26 PM

The RUT has had a bullish follow through to its descending wedge pattern. After dropping below the bottom and then rallying back inside the pattern earlier this week, and then finding support at the bottom of it when it pulled back, it has rallied strongly out of the wedge today. If it can make it back up to its broken uptrend line from March, near some Fib projections around the 828 area, that will be a good test for the bulls. The bullish price objective (for two equal legs up from May 1st) is 838 with possible trend line resistance just above that at 840. Link

Jane Fox : 5/18/2007 2:17:40 PM

Small Caps are on fire today. Link

Jane Fox : 5/18/2007 2:16:20 PM

This is no time to be short folks. Link

Keene Little : 5/18/2007 2:12:23 PM

Tab, all excellent points you make (1:43). Having read some more information on what was going on in 1929, with the run up in the stock market as a result of a lot of M&A activity, etc., all the while the economy was softening, it all has a ring of familiarity here. But that rally went all the way through the summer so as stretched as this market is, it can get a whole lot more stretched. Same thing happened with the techs in 1999.

Jeff Bailey : 5/18/2007 2:02:53 PM

AK Steel (AKS) $34.28 +3.63% ... CNBC reporting company has canceled appearance at investor conference. Company has been cited as "in play" for takeover.

Jeff Bailey : 5/18/2007 1:59:19 PM

SPX 1,521.09 ... If today's high isn't taken out to the upside and we close here, next WEEK's WEEKLY Pivot levels would be ... 1490.32, 1505.82, Piv= 1,513.84, 1529.34, 1537.36.

Jeff Bailey : 5/18/2007 1:50:30 PM

USPIX closed $12.06 yesterday.

UCPIX closed $12.64

Jim Brown : 5/18/2007 1:47:46 PM

Looks like another OpEx buy program hitting the tape. With today an option expiration Friday we could see additional volatility especially with a surprise market move higher disrupting all the best laid plans of option holders. Those hoping their short options would expire worthless may be having to cover to avoid being exercised on Monday.

Tab Gilles : 5/18/2007 1:43:39 PM

Keene, I agree with your view of the large cap move, yes it is defensive. But it is also a move on the global market. The US is not the only player in this game...China, India and other nations are growing much stronger and the wealth is spreading. International stocks is a way for the foreign investors to hedge the currency market. The GE's, IBM's, John Deere's of the world are enfuego now.

As for sell in May?? The last 4 presidential cycles the year before has historically resulted in 25% returns for the year. The market has had a nice run up and some pullback or consolidation should be expected....it's been a difficult market to short for sure. It has been the 4th longest bull market and 2nd longest with out a 10% correction. But as long as buy backs, short squeezes, M&A activity and liquidity continue this market creeps ever higher.

The SPX is approaching the 2000 high of 1530/1550, we may get a test or slightly above that then a pullback. The easy money has been made and being cautious is warranted...get defensive.

Jeff Bailey : 5/18/2007 1:43:39 PM

01:00 Internals found at this Link

Jeff Bailey : 5/18/2007 1:40:35 PM

Mid-point of today's YM range is 13,563. Regular session of course.

Jeff Bailey : 5/18/2007 1:37:55 PM

YM 13,564

Jeff Bailey : 5/18/2007 1:36:52 PM

Still a possibility for the "pull in" this afternoon.

Jeff Bailey : 5/18/2007 1:36:06 PM

VXO.X 13.01 -2.69% ...

Keene Little : 5/18/2007 1:34:15 PM

NDX still has a very messy pattern which leaves open several possibilities. The sideways triangle pattern I've had on the 60-min chart (red trend lines) is still a possibility and it's bullish after another pullback to the bottom of it, perhaps around 1875 by the end of next week (shown with the light green path). Link

Like the DOW and SPX it's possible that the current bounce could be finishing up soon and we'll see a swift decline follow (dark red). Or it'll continue to press higher towards the Fib projection near 1915 (dark green). I'm sticking with SPX and the DOW for some clues as I think those are easier to read at the moment. There isn't a price level to the downside that's close enough to warn us that something more bearish is happening.

Jeff Bailey : 5/18/2007 1:33:38 PM

IBM 107.34 +1.92% ... WEEKLY R1 $107.23, DAILY R2 $106.91.

WEEKLY R2 $108.50

Jeff Bailey : 5/18/2007 1:30:34 PM

C $54.82 +0.03% ... DAILY Pivot now. Session high was $55.35.

Jeff Bailey : 5/18/2007 1:26:55 PM

Target for ACH-WF is $23.50 in the underlying.

Keene Little : 5/18/2007 1:24:41 PM

I think it's much simpler than the market "knowing" something about China. I think money rotating into large caps has been a defensive move as smart money gets ready for the time of year known not to be that great for the market--May to September. It' better and easier to slip out of the higher beta stocks and into the large caps before a market sell off begins.

Money is also rotating into consumer staples and that's usually a pretty good sign of the end of a bull market (consumer staples tend to hold up better in a bear market because it's non-discretionary spending).

Jim Brown : 5/18/2007 1:23:57 PM

I am going to try an ER short here at 822.50 with a tight stop at 823.70. I think that buy program that blew through here at 12:30 has run its course.

Jeff Bailey : 5/18/2007 1:21:05 PM

ACH has a HEFTY stock dividend. If looking to SHORT the shares, understand quarterly dividends must be PAID by the short.

Jeff Bailey : 5/18/2007 1:19:58 PM

And there may be "bearish" consequences for those company's that EXPORT from China.

Jeff Bailey : 5/18/2007 1:19:34 PM

Swing trade put alert for one (1) of the Aluminum Corp. China ACH Nov $30 Puts (ACH-WF) at the offer of $2.40.

ACH $33.51 -2.13% ...

Jane Fox : 5/18/2007 1:14:17 PM

Not to dispute what you are saying Jeff, but if you are right then the MARKET knew this news out of China was coming down the pipe back in mid March? That seems like a pretty long time for this kind of news to be kept quiet. Also I think I am the MARKET and everyone here is the MARKET and we didn't know so then who knew and for how long. I know the big guys have much more of an influence than we do but I think we would have gotten wind of this before now. Link

Jane Fox : 5/18/2007 1:09:06 PM

That last move started around 12:35. Here is what I was seeing at 12:30, plenty of time to get long. Link

Jeff Bailey : 5/18/2007 1:08:49 PM

And perhaps Jane, now it makes SENSE as to "why" the DAX and Dow Indu have been so strong and why the small caps have been lagging as greater capital flows have been rotating to the exporters to China.

Jeff Bailey : 5/18/2007 1:07:32 PM

OK .. for those that do. I think the MARKET figured out the China news that they will step up efforts to revalue their currency. This should BENEFIT company's that EXPORT to China, perhaps shifting trade imbalances in the months, quarters and years ahead.

Jeff Bailey : 5/18/2007 1:02:23 PM

01:00 Market Watch found at this Link

Jane Fox : 5/18/2007 1:01:30 PM

Jeff I don't relate the markets move to any news. I just see what is on the charts and react to it. Sorry I wish I could be of more help here. BTW I have seen the DAX and the DOW move together all this week so I would not read anything into them moving together because of news.

Jeff Bailey : 5/18/2007 12:59:27 PM

YM Long alert 13,578 here. Stop 13,560 and target 13,617.

Jane Fox : 5/18/2007 12:59:22 PM

I am so kicking myself because I saw the VIX make new daily lows and ADV new daily highs and I know that is about the best setup you can have for a long but I was doing other things and didn't get it. &@#&*(#&#@( Link

Jeff Bailey : 5/18/2007 12:58:38 PM

VXO.X alert! 12.74

Jeff Bailey : 5/18/2007 12:56:53 PM

Jane ... what do YOU make of the strength in the DAX and INDU in relation to today's news out of China?

Jeff Bailey : 5/18/2007 12:56:12 PM

NASDAQ ETF Heatmap screen capture Link ... may be useful in the weeks, month, quarter's ahead.

Jeff Bailey : 5/18/2007 12:51:28 PM

NASDAQ's ETF Heatmap Link

Jeff Bailey : 5/18/2007 12:47:41 PM

ETF % losers at this Link

Jeff Bailey : 5/18/2007 12:47:10 PM

ETF % gainers at this Link

Jane Fox : 5/18/2007 12:46:27 PM

Jeff, yes I have just started following the DAX to see if there is some kind of correlation between it and the DOW so that I can better time entries. Link

Keene Little : 5/18/2007 12:46:06 PM

The DOW pulled back after tagging the top of its ascending wedge but it might push up along the top of it if it pushes higher into this afternoon. The bullish wave pattern calls for another pullback, either to its uptrend line from May 11th (red) or the one from April 12th and then another rally leg up. What's a little different here as compared to the SPX pattern is that the current high does have bearish divergence and that continues to suggest we might be topping here (dark red wave count). Link

Jeff Bailey : 5/18/2007 12:40:52 PM

Jane! ... You've been noting DAX strength right?

Jeff Bailey : 5/18/2007 12:39:59 PM

China's biggest import market is the EU.

Jane Fox : 5/18/2007 12:36:58 PM

Looks like the VIX was trustworthy today.

Jeff Bailey : 5/18/2007 12:35:23 PM

I've got retracement on NWS and DJS that encompass 05/07 and 05/09 inflections.

Jeff Bailey : 5/18/2007 12:34:34 PM

DJ -1.48%

NWS +1.62%

Jeff Bailey : 5/18/2007 12:32:55 PM

VXO.X 12.98 -2.91% ... DAILY Pivot Levels are ... 12.79, 13.08, Piv= 13.53, 13.82, 14.27

Jeff Bailey : 5/18/2007 12:30:58 PM

SPY $152.23 +0.60% ... DAILY R2 $152.31.

Jeff Bailey : 5/18/2007 12:30:26 PM

VIX.X 12.88 -4.66% alert! ...

Keene Little : 5/18/2007 12:28:36 PM

Today's pullback from the high is already showing enough of a corrective pattern to say we haven't seen the high yet. While it could press higher from here I suspect it would only be a minor one and not worth chasing. We will probably see more of a consolidation into Monday in a move down/over to the uptrend line (bottom of the ascending wedge). Basically we should expect more choppy price action.

Jeff Bailey : 5/18/2007 12:23:23 PM

Has ANYONE, other than myself been asking themselves ... "Why have the LARGE CAPS been outperforming the small caps so notably the past couple of months," or why the iShares Japan (EWJ) have been a laggard, or why the USD/JPY trade has been so influencial?

Does today's "revelation" out of China make sense?

The MARKET is all-knowing, and smart money probably figured this out months, if not quarters ago.

Jeff Bailey : 5/18/2007 12:18:11 PM

Wait ... I've got a better idea.

Jeff Bailey : 5/18/2007 12:17:16 PM

IWN $81.91 -0.06% ...

IWO $83.04 +0.63% ...

IWM $81.14 +0.44% ...

Jane Fox : 5/18/2007 12:06:54 PM

VIX hovering at daily lows tells me the next move is up but this is OPEX Friday and if there is one day I do not trust the VIX it is on OPEX Friday. Link

Jeff Bailey : 5/18/2007 11:55:53 AM

11:00 Internals found at this Link

Keene Little : 5/18/2007 11:50:32 AM

Is that a little throw-over above the top of SPX's ascending wedge followed by a drop back inside the pattern? If so then we have a sell signal and have seen the high. But until I see an impulsive decline develop, and the lower uptrend line break, it's just a guess as to whether or not we've put in the high. Link

The bullish (green) wave count is calling for another choppy sideways/down pullback before the final high (maybe) in this pattern. But the bearish (dark red) wave count calls today's rally as the end of the pattern. While the little throw-over has me wondering about this bearish possibility I don't trust it because there's no bearish divergence against Tuesday's high. Without that confirmation I'm thinking the bullish wave count is the one we're in.

Jeff Bailey : 5/18/2007 11:49:51 AM


DJ- Treasury Secretary Paulson says high-profile economic policy meetings being held next week between China and the U.S. will focus on the pace of Chinese economic reforms 'beyond the (World Trade Organization) obligations.'

Jeff Bailey : 5/18/2007 11:47:54 AM

Mutual Fund Reallocation alert! ... For those investors that utilize mutual funds in their 401-k plans, I would suggest re-allocating those assets this weekend.

Especially those that utilize Morningstar style boxes of Large and small cap.

Jeff Bailey : 5/18/2007 11:38:26 AM

Yes! Yes! Mr. Santelli.

Jane Fox : 5/18/2007 11:37:29 AM

Here is a look at PDRs. Link

Jane Fox : 5/18/2007 11:30:36 AM

Internals are not talking to me today. Link

Jeff Bailey : 5/18/2007 11:19:00 AM

Aluminum Corp. China (ACH) $33.73 -1.43% ... the revalation, thought process begins.

Jeff Bailey : 5/18/2007 11:05:25 AM

A lot of light bulbs go on in the heads of U.S. equity shorts today.

Jeff Bailey : 5/18/2007 11:03:19 AM

11:00 Market Watch found at this Link

Jeff Bailey : 5/18/2007 11:00:06 AM

iShares Japan (EWJ) 14.22 -0.48% ...

Jeff Bailey : 5/18/2007 10:59:15 AM

ForexCurrency ... live Link

Jeff Bailey : 5/18/2007 10:57:18 AM

ForexCurrency screen capture at this Link

Gut feel is we'll need this in days, weeks, months ahead.

Jeff Bailey : 5/18/2007 10:54:24 AM

Japanese Market Drops to 10-day Low

Jeff Bailey : 5/18/2007 10:53:55 AM

Yen Gains Across The Board After China Raises Interest Rates

Jeff Bailey : 5/18/2007 10:47:47 AM

For those that have been following the U.S. Treasury Paulson's words, China's move looks accomodative regarding yuan.

Jeff Bailey : 5/18/2007 10:45:58 AM


DJ- One-year yuan lending rate will rise by 18 basis points to 6.57%, and the one-year yuan deposit rate will increase by 27 basis points to 3.06%, in effort to curb growth. The trading band for the yuan against the dollar also will rise.

Keene Little : 5/18/2007 10:42:25 AM

If you shorted resistance on either SPX or the DOW you should now lower your stop to just above the high. This was a short based on that resistance level so don't let it go against you now.

Jeff Bailey : 5/18/2007 10:39:37 AM

VIX.X 13.03 -3.55% .... sitting on DAILY S2.

Jeff Bailey : 5/18/2007 10:38:13 AM

Great interview this morning with sepecialist on CNBC.

He thought stocks would "pull in" this afternoon after hot open.

Now, remember he's a specialist. He wants them to pull in. Especially if he's been selling naked calls.

If by 01:00 and we're above DAILY R2's with some room to the weekly's, be ready to inflict some pain to the close. If at/near some points of resistance, maybe he's tipped his hand that a day trader short can take advantage of.

Jeff Bailey : 5/18/2007 10:34:03 AM

Never is for IWM. Have to look at option montage over time.

Keene Little : 5/18/2007 10:32:34 AM

Jeff, can't find max pain on IWM.

Jeff Bailey : 5/18/2007 10:32:38 AM

Citigroup (C) $55.26 +0.83% ... has broken above the $55.00 strike. On Wednesday, was monitoring the $55.00 calls. Big seller at $0.40 and $0.35.

today's DAILY R2 $55.49.

Jeff Bailey : 5/18/2007 10:30:56 AM

SPY $152.22 +0.61% ... at DAILY R2 here, could sense/observe the squeeze yesterda. If this doesn't hold, then WEEKLY R2 is next.

Jeff Bailey : 5/18/2007 10:25:35 AM

Keene! Any idea what the IWM's "Max Pain" is for May?

Keene Little : 5/18/2007 10:22:34 AM

NDX is now trying to rally out of its consolidation but the RUT is sitting there like a lump on a log.

Jeff Bailey : 5/18/2007 10:21:16 AM

ValueClick (VCLK) $30.93 +10.9% Link ... only publicly traded name left in the space.

Jeff Bailey : 5/18/2007 10:22:05 AM

aQuantive (AQNT) $63.63 +77.39% Link ... agrees to be acquired by Microsoft (MSFT) for $66.50 in cash.

Jeff Bailey : 5/18/2007 10:16:31 AM

Johnson & Johnson (JNJ) $63.41 +1.06% ... busts a move.

Keene Little : 5/18/2007 10:14:02 AM

DOW and SPX are now both hitting the tops of their ascending wedges. It's an attempt to catch a rising knife but this is the place to try a short.

Jeff Bailey : 5/18/2007 10:10:35 AM

DJUSHB 628.65 -0.61% ... correction to 10:05:00 Market Watch.

Jeff Bailey : 5/18/2007 10:07:21 AM

10:05 Market Watch found at this Link

Jeff Bailey : 5/18/2007 10:02:54 AM

bpREAL ... Weekly Distribution of securities comprising sector bullish % Link

Keene Little : 5/18/2007 10:01:53 AM

ES tagged the top of its ascending wedge on that spike up.

Keene Little : 5/18/2007 9:56:05 AM

The one caution for bears here is that NDX could be getting ready to bust a move to the upside after its sideways consolidation since yesterday's high. If it did that I'm sure it wouldn't be rallying by itself. If it continues to chop up and down for a little longer today it will look more bullish.

Jeff Bailey : 5/18/2007 9:52:06 AM

Sector Status Change ... REAL Estate sectur bullish % reverses back lower in two parts. Was "bull confirmed," then 3-box reversal yesterday was "bull correction," and additional box lower to 56% achieves "bear confirmed" status.

Keene Little : 5/18/2007 9:51:45 AM

The DOW continues to get squeezed higher inside its ascending wedge so if it pulls back now and finds support at its uptrend line then another minor new high could do it for this rally. But a break below 13450 would be a bearish heads up. Link

Jeff Bailey : 5/18/2007 9:45:40 AM

Office Max (OMX) $46.02 +2.24% ... moves into recent gap. Double-top buy signal here after test of trend.

Keene Little : 5/18/2007 9:44:47 AM

The techs and small caps are up today but still holding back. Their charts continue to be set up for a nasty spill if they can't rally higher from here.

Keene Little : 5/18/2007 9:34:17 AM

The top of the ascending wedge (top of its parallel up-channel) for the DOW is near 13540-13550 depending on how the trend line is drawn in.

Jane Fox : 5/18/2007 9:27:17 AM

Seems crude has as well. Link

Jane Fox : 5/18/2007 9:25:47 AM

Looks like Gold has found its support for now. Link

Jane Fox : 5/18/2007 9:12:37 AM

Crude broke its PDH overnight, US$ tagged its PDH but take a look at the DAX! It is on a tear. Link

Keene Little : 5/18/2007 9:07:35 AM

Looks like a nice gap up opening coming this morning. Opex manipulation for a high settlement price? Wouldn't surprise me in the least. I'd be careful about what happens after the open. But if the buyers can continue to push it higher after the open then watch SPX 1520 as the next resistance level (top of its ascending wedge) which is less than 3 points above yesterday's high. ES is now challenging yesterday's high so it's not a stretch to think that level will get tagged.

Jane Fox : 5/18/2007 8:56:18 AM

Interesting now overnight ES and YM have respected their PDHs and ER and NQ have respected their PDLs. Link

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