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Keene Little : 5/22/2007 12:08:43 AM

End of day re-posts:

Tuesday's pivot tables: Link and Link

The DOW continues to stay beneath the trend line along the highs since March but it also held at its uptrend line from May 11th on Monday afternoon's pullback. Whether it rallies back up from here or after dropping down to its uptrend line from April 12th, this will ideally give us another rally leg to complete a cleaner 5-wave move up from May 10th. The DOW is looking more vulnerable than the others to a breakdown from here. A drop below 13481 would be a bearish heads up (down). Link

SPX barely stayed in its tight up-channel from May 16th so a drop lower would likely have it at least testing its uptrend line from March, currently near 1515. If that level breaks then things will start to look a lot more bearish. But if it rallies back up from here or first does a sideways/down consolidation over to its uptrend line, then the Fib projections around 1540 would be the area I expect it to rally to. Link

NDX held within its tight up-channel from last Wednesday so if it can rally a little higher the Fibs are pointing to anywhere from a double top at 1920 up to 1930 where the 5th wave in the move up from May 16th would equal the 1st wave. In between is the Fib at 1924.60 which is the first Fib projection for the move up from March. This final 5th wave is where I'll be looking to get short for hopefully a position trade. Link

The RUT's pattern looks similar to the one for NDX in that one more push higher could do it for the rally. There are two Fib projections of interest--838.05 and 840.29 which could be hit by mid week. In between is the trend line along the highs. It takes a break below 825 to give a heads up that something more bearish is happening. Link

Jeff Bailey : 5/21/2007 10:56:31 PM

Russell 2000 NH/NL tally was 119:14 for 5/21/07. (see Monday's MM at 11:34:53 AM) Link

Jeff Bailey : 5/21/2007 10:45:39 PM

Fed's Moskow: 'Would Be A Surprise' If Growth Doesn't Pick Up

DJ- Though the U.S. economic slowdown has been more pronounced than expected, growth should pick up as the year progresses, Federal Reserve Bank of Chicago President Michael Moskow said Monday.

"I see growth improving and I see ... our expectation is that inflation rates will continue to come down" this year, Moskow said according to a transcript of an interview with the PBS Nightly Business Report to be aired Monday.

The unemployment rate, meanwhile, "will not go up a great deal" from its current level of just 4.5%, which Moskow noted is "very low by historical standards."

Moskow's view that the economy is "moving in the right direction" is consistent with the expectation that the Fed will hold interest rates steady at least through the autumn. Investor hopes for lower rates have been scaled back in the wake of positive reports from manufacturers and weekly jobless claims.

The Fed has held its benchmark interest rate steady at 5.25% for almost one year, a period spanning seven Federal Open Market Committee meetings. Moskow, who will step down in August after 13 years as head of the Chicago Fed, is a voting FOMC member this year.

Moskow conceded the current economic slowdown took him and other officials by surprise, in part due to unforeseen increases in energy prices. The U.S. grew at only a 1.3% rate last quarter - which will likely be revised even lower - and hasn't grown at its widely assumed potential of around 3% for four straight quarters.

"Now going forward, if we don't start improving as we move through this year and the growth rate does not move up then that would be a surprise to many of us," Moskow said.

But Moskow's remarks signal the dual dilemma he and other officials face. The normal recipe for subpar growth is lower interest rates. But inflation has been persistently high, though it has receded in the past couple of months.

The Fed's preferred gauge, the personal consumption expenditures price index excluding food and energy is running at 2.1%. Moskow reiterated in Monday's interview that he'd like to see inflation between 1% and 2%.

"Right now we've been running above that range for over three years so I would personally, this is again my personal view, is that I'd like to see inflation rates running lower at this point and more toward the center of that zone," he said in the Nightly Business Report interview.

Moskow also said he expects the housing market to stabilize "as we move through this year" but that "no one can say exactly" when that is going to occur.

"I had thought it was stabilizing toward the end of last year as well and then we had some numbers that turned out to be worse than expected," Moskow said.

As for housing's impact on the economy, "so far it's been manageable," Moskow said, adding he hasn't seen much sign that housing weakness has affected consumer spending.

Moskow said higher equity prices should boost consumer spending, as should strong labor markets. On the other hand, higher gasoline prices "adversely" affect the consumer, he said.

Jeff Bailey : 5/21/2007 10:26:03 PM

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

OI Technical Staff : 5/21/2007 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 : 5/21/2007 6:15:26 PM

Closing U.S. Market Watch found at this Link

Keene Little : 5/21/2007 5:24:45 PM

Tuesday's pivot tables: Link and Link

Keene Little : 5/21/2007 5:23:45 PM

SPX barely held onto its tight up-channel from May 16th so a drop lower would likely have it at least testing its uptrend line from March, currently near 1515. If that level breaks then things will start to look a lot more bearish. But if it rallies back up from here or first does a sideways/down consolidation over to its uptrend line, then the Fib projections around 1540 would be the area I expect it to rally to. Link

Keene Little : 5/21/2007 5:07:03 PM

The DOW continues to stay beneath the trend line along the highs since March but it also held at its uptrend line from May 11th on this afternoon's pullback. Whether it rallies back up from here or after dropping down to its uptrend line from April 12th, this will ideally give us another rally leg to complete a cleaner 5-wave move up from May 10th. But for as strong as the DOW has been, this price pattern now looks the most vulnerable to a breakdown from here. A drop below 13481 would be a bearish heads up (down). Link

Keene Little : 5/21/2007 4:56:30 PM

NDX 60-min chart updated with the closing price. It held within its tight up-channel from last Wednesday so it it can give us another leg up then the Fibs are pointing to anywhere from a double top at 1920 up to 1930 where the 5th wave in the move up from May 16th would equal the 1st wave. In between is the Fib at 1924.60 which is the first Fib projection for the move up from March. This final 5th wave is where I'll be looking to get short for hopefully a position trade. Link

Jeff Bailey : 5/21/2007 4:49:11 PM

Closing Internals found at this Link

Keene Little : 5/21/2007 4:38:24 PM

Thanks Jane. That was my answer too--stand back and look at it. Does it look like a double top? That is of course subjective but what we do in technical anaysis is subjective--it's how we interpret what we're seeing.

Linda Piazza : 5/21/2007 4:38:18 PM

So, you don't think subscribers would be patient enough to wait for that confirmation, Keene? Smile. See Keene's 4:36:20 post.

Keene Little : 5/21/2007 4:36:20 PM

Thanks Linda. You're exactly right about the need to break below the trough to confirm a double top. We are of course looking at SPX right now to see if we put in a double top against the March 2000 high. With a relatively wide spread between the intraday high at 1552 and the closing high at 1527 that leaves a wide enough window to prompt the question "how close does price need to be to a double top"?

And of course the trough in this case is the October 2002 low. Me thinks we might have a few traders who might like to short the market before we get down to that level at 768 (wink).

Keene Little : 5/21/2007 4:26:34 PM

The RUT's pattern looks similar to the one for NDX in that one more push higher could do it for the rally. As I've been pointing out on its 60-min chart, a Fib projection at 838.05 is where there would be two equal legs up from May 1st to finish off the last leg of the rally from March. Link

Now within the final leg up from May 16 (which needs to be a 5-wave move) the 5th wave will equal the 1st wave at 840.29. This assumes of course that we'll get another push higher after the current pullback finishes. Until I see evidence to the contrary I'm saying we'll see the RUT top out between 838-840 by mid week (could be right at the trend line along the highs, which actually started back from March 2000 across the February 2006 high). And then it will finally be "sell in May and go away".

It takes a break below 825 to give a heads up that something more bearish is happening.

Jane Fox : 5/21/2007 4:26:12 PM

Keene, in response to your 4:07 post. This is where the art of trading comes in because there is no "right" answer. If it looks like a double top to you then there is a good chance it is. If a double top is not exact you have to have that "sense" that it is or isn't - it is not an exact science.

Linda Piazza : 5/21/2007 4:22:07 PM

Keene, in response to your 4:07 question, I can't find an exact answer, either. Pistolese (Using Technical Analysis) says that the tops should be of the same "approximate" height and that "slight variations in the height of the two tops are of no particular significance." The only rigid requirement I could find in any of my texts was that volume be considerably lower on the second attempt at a top than the first.

I do like to look at closes to determine double-top or bottom formations, so that if prices pierce the previous top but close the period (minute, hour, day, week) at or below the first top, I would likely still consider that a potential double-top formation. Of course, I don't know what security your subscriber was watching, but I certainly don't consider a double-top in place anyway unless the prices drop below the trough between the two attempts at highs. Until then, it's a "potential" double top.

Keene Little : 5/21/2007 4:07:09 PM

I received a question from a reader for which I don't have a precise answer (if there is one). Basically he's wanting to know if there is a certain "window" around a double top. In other words, it doesn't have to be precise but I'm not aware of how much it can be off, lower or higher, and still be considered a double top (or bottom). So I thought I'd put the question out to anyone who might be able to answer that question. Jane, Jeff, Linda? Feel free to jump in.

Keene Little : 5/21/2007 3:56:24 PM

Here's that NDX 60-min chart with the wave count for the leg up from March 16th, showing why I think we need one more push higher after this correction is finished (green wave-(v) to finish a cleaner looking 5-wave move). I don't have it drawn in but NDX pulled right back to its uptrend line from the 16th and bounced. Now let's see if it holds. Link

Jane Fox : 5/21/2007 3:36:22 PM

YM followed the DAX to new daily lows. Link

Jeff Bailey : 5/21/2007 3:36:04 PM

Pali Research Analyst Speculates News Corp. Backing Away From $5 Billion Bid For Dow Jones

MarketWatch Story Link

Keene Little : 5/21/2007 3:33:34 PM

When NDX rallied above 1906 today, the high on May 14th, it negated the bearish wave count (confirmed with a rally to a new high after that). By doing a little over-throw above the trend line across the highs since last November and then dropping back below, we have a potential sell signal (meaning the rally could be complete). A drop back below 1892 is needed to confirm that but heads up here. Link

If instead this pullback is followed by one more new high, to give us a cleaner 5-wave move up from the May 16th low near 1857, then a Fib projection at 1926.40 (wave-5 = 62% of wave-1 in the rally from March) would be my guess as to where this is headed. A break below 1857 would be the icing on the cake for bears--it would say THE high is in. Just be careful of chop and whipsaws here.

Jeff Bailey : 5/21/2007 3:32:17 PM

SPX 1,523.45 +0.04% ... "well above" correlative MONTHLY R1/WEEKLY Pivot.

Jeff Bailey : 5/21/2007 3:31:09 PM

VIX.X 13.25 +3.84% ... comes to WEEKLY Pivot from below.

Jeff Bailey : 5/21/2007 3:14:40 PM

03:00 Internals found at this Link

Keene Little : 5/21/2007 3:09:41 PM

If the selling gets a little stronger and SPX breaks down out of its tight up-channel from last Wednesday's low, then I'd say we'll get a little larger pullback, perhaps down to the 1515-1520 area to its uptrend line from March. It would likely be a very choppy ride down. From there it should get a final rally leg and the first Fib projection of interest is just shy of 1538 (wave-5 = 62% of wave-1 in the rally from March). Link

The next higher Fibs that I pointed out on the daily and weekly charts last night (at the beginning of today's posts) are at 1542-1545. The all-time high is near 1552. It takes a break below the uptrend line from March to say we've got something more bearish already started.

Linda Piazza : 5/21/2007 3:08:03 PM

I mentioned earlier today that I had been watching the VXO rather than the VIX as the VXO had been trending more clearly than the VIX at the end of last week. In fact, the VXO had been trending down since about 2:00 last Thursday. I had noted that subscribers might watch the VXO, to see when it broke through that descending trendline. FWIW, it's done so now.

Jeff Bailey : 5/21/2007 3:01:36 PM

03:00 Market Watch found at this Link

Keene Little : 5/21/2007 2:57:51 PM

Think they might hold SPX above 1527 into today's close in order to claim a new all-time closing high (above March 2000 1527)? They better not let any selling get out of control.

Jeff Bailey : 5/21/2007 2:50:35 PM

Monitoring the PTR Sep $140 Calls (PTR-IH) $5.10 x $5.50 and the Sep $145 Calls (PTR-II) $3.60 x $3.90.

PTR $132.28 +1.13% ...

Keene Little : 5/21/2007 2:43:26 PM

I mentioned earlier that we would probably get a flattish consolidation into tomorrow. So far you can't argue with that. Booorinnng. It's just another rally with no pullbacks. Then the next rally leg starts and those who wanted to buy it (new longs, frustrated shorts) are forced to chase it higher. It certainly has been the signature of rallies for a quite a while now.

Jeff Bailey : 5/21/2007 2:41:42 PM

PetroChina (PTR) alert! $132.29 +0.86% ... at the "bear's" 19.1% retracement.

Jane Fox : 5/21/2007 2:41:25 PM

Keene, funny how the Jul contract can differ from the continuous contract isn't it.

Keene Little : 5/21/2007 2:38:52 PM

USO did however break its downtrend line from July 2006 so next resistance is its broken uptrend line from January, currently near 51.50, and then its last high near 52. Link

Keene Little : 5/21/2007 2:29:35 PM

Jane, maybe because you're using the continuous contract but my CL chart (July contract) shows a different picture than yours. Hitting potential resistance nonetheless. Link

Jane Fox : 5/21/2007 2:25:24 PM

Crude testing yearly highs. Link

Jeff Bailey : 5/21/2007 2:24:24 PM

MERRILL ACQUIRE STAKE IN HEDGE FUND

DJ- Brokerage is taking a minority stake in GSO Capital Partners, an $8 billion hedge fund and investment firm that is known for helping private-equity firms finance deals.

MER $94.49 +0.33% ...

Jane Fox : 5/21/2007 2:23:43 PM

AD volume to new daily highs but the VIX is not making new daily lows so this is bullish but long trades will have no follow through. Link

Jeff Bailey : 5/21/2007 2:17:23 PM

Momentum To Be Key Focus Of House GSE Vote

DJ- It is now unclear whether a bill to reform Fannie and Freddie oversight will emerge from a vote in the House of Representatives to snowballing momentum or a screeching halt. That's because lawmakers passed a bipartisan amendment favorable to both firms and against objections of Bush administration.

FNM $63.27 +0.14% ...
FRE $67.64 +0.07% ...

Jeff Bailey : 5/21/2007 2:15:18 PM

HIGH COURT OKS REVIEW MUNI-BOND CASE

DJ- Supreme Court says it will review whether Kentucky can offer tax breaks on in-state municipal bonds while continuing to require residents to pay taxes on out-of-state bonds.

Jeff Bailey : 5/21/2007 2:14:21 PM

Manpower (MAN) $87.37 +1.28% ... New all-time high!

Jeff Bailey : 5/21/2007 2:13:23 PM

TECH INDUSTRY GIVES IMMIGRATION DEAL MIXED REVIEWS

DJ- White House and a bipartisan group of senators unveil deal on a proposal to reform immigration policy. Full details of the bill haven't been released, but congressional aides say it includes provisions that would nearly double the yearly cap on temporary employment permits for skilled workers.

Jeff Bailey : 5/21/2007 2:10:59 PM

Aluminum Corp. China (ACH) $34.05 +1.30% ...

Jeff Bailey : 5/21/2007 2:10:30 PM

CHINA TAKES ACTION TO COOL STEEL EXPORTS

DJ- China takes further steps to trim its surging trade surplus, making tariff changes that will raise prices for its exports of steel and metal products, in the latest of several policy announcements on the eve of high-level economic talks with U.S.

Jeff Bailey : 5/21/2007 2:03:53 PM

WILLIAMS SELLS POWER ASSETS TO BEAR STEARNS

DJ- Natural-gas explorer and transporter will sell power assets to Bear Energy for a maximum of $512 million. Deal includes 7,700-megawatts of gas-fired tolling capacity and 1,800 megawatts of power-supply contracts.

WMB $30.98 +7.01% ...
BSC $151.58 +1.34% ...

Jeff Bailey : 5/21/2007 2:01:15 PM

NO MERGER FOR CHRYSLER FINANCING, GMAC

DJ- Officials at Chrysler Financial Services see little chance of a merger with GMAC Financial Services, even though the two auto-lending companies soon will be majority owned by Cerberus Capital Management.

Jeff Bailey : 5/21/2007 2:00:30 PM

RULES, PRINCIPLES NEED TO BE BALANCED

DJ- Treasury Undersecretary Steel says U.S. regulatory structure needs to balance a principles- and rules-based approach as U.S. capital markets adjust to rising foreign competition.

Jeff Bailey : 5/21/2007 1:59:11 PM

CAMPBELL SOUP 3Q NET RISES 31%

DJ- Food conglomerate's net income rises to $217 million, or 55c a share, as revenue rises 8.1% to $1.87 billion. Analysts expected EPS of 41c. Shares up 1% as firm boosts fiscal-year earnings forecast.

CPB $40.00 +1.26% ... still some room to Bull VC of $87. Keep this one in mind for late-summer bull entry as "fall/winter seasonal play."

Mmm, Mmmm, good!

Jeff Bailey : 5/21/2007 1:48:40 PM

U.S. Oil Fund (AMEX:USO) $50.82 +1.43% Link ... $0.50 box to match futures. At trend here.

Jeff Bailey : 5/21/2007 1:47:05 PM

SUMMER SURGE IN OIL PRICES LIKELY

DJ- Centre for Global Energy Studies says another surge in oil prices will be difficult to avoid over the summer months as the world needs more oil than OPEC is willing to produce.

Jeff Bailey : 5/21/2007 1:46:24 PM

GLAXO FALLS ON AVANDIA STUDY RESULTS

DJ- Analysis of studies being published in the New England Journal of Medicine reports Avandia, a GlaxoSmithKline drug used to treat Type-2 diabetes, "significantly increases" the risk of heart attacks.

GSK $53.30 -7.64% ...

Jeff Bailey : 5/21/2007 1:45:13 PM

GE TO SELL PLASTICS BUSINESS FOR $11.6B

DJ- General Electric agrees to sell its plastics business to Saudi Arabia's Saudi Basic Industries Corp. for $11.6 billion. GE will receive after-tax proceeds of about $9 billion, which will be used to relaunch its stock-buyback effort.

GE $37.17 +0.56% ...

Jeff Bailey : 5/21/2007 1:44:05 PM

Home Depot (HD) $38.87 -0.02% ...

Jeff Bailey : 5/21/2007 1:43:45 PM

LOWE'S NET FALLS 12%; FIRM CUTS VIEW

DJ- Home-improvement retailer's 1Q net income slips to lower-than-expected $739 million, or 48c a share, in difficult housing market. Weakness results in Lowe's cutting fiscal-year earnings guidance.

LOW $31.39 -3.91% ...

Keene Little : 5/21/2007 1:39:46 PM

I had mentioned last week sometime that a similarity to what's happening now as compared to 1929 is all the LBOs (leveraged buyouts) and M&As (mergers & acquisitions) that are occurring while the economy is softening. Everytime there was news about an LBO or M&A in 1929 the stocks shot higher in a euphoric climb. We of course know how badly that ended. Today we're seeing something similar where everyday we hear about another LBO and/or M&A. This is happening while the economy is softening.

Many will argue about the economy softening or not and I like to watch the price of copper for clues in that regard. After a clean 5-wave rally off the February low (which left a nice bearish divergence at the 5th wave high, as it should, after hitting the Fib projection for the 5th wave = 62% of the 1st wave), copper has dropped sharply from its May high. The decline looks impulsive which says the new trend is down. There should be a bounce followed by another leg down. July daily contract: Link

This decline in copper is our heads up that something is not right with the rally in stocks. During euphoric, blow-off tops the market is Not all-knowing. Higher inflation (the inflation in energy and food will drive core inflation higher), higher bond yields and slower economic growth is a recipe for a bear market. At this point if you're long stocks, trade 'em but don't love 'em.

Jeff Bailey : 5/21/2007 1:33:59 PM

NYSE Euronext (NYX) $86.32 +4.7% ... recently achieved/exceeded its bearish vertical count of $83. Would take a trade at $87 for a reversing higher PnF buy signal.

Linda Piazza : 5/21/2007 1:22:40 PM

Checking in again for a moment, I see that the RUT's resistance on the daily chart has again held, at least temporarily. That's signified by the RUT dropping back below the resistance level on the daily chart. However, the day is far from over. The RUT is not back below the 15-minute 9-ema, an average that's been bouncing it higher since early Friday morning when it began breaking higher again. Until and unless it begins closing 15-minute periods below that average, now at 833.78, it hasn't even begun to change its uptrend since Friday. Also, until it begins closing 30-minute periods below the 30-minute 9-ema, now at 831.44 but still rising, it hasn't erased its 30-minute upside target, now at 839.76. Until and unless those things happen, the assumption has to be that it's still in "test upside resistance" mode, but watch for those changes to occur.

Jeff Bailey : 5/21/2007 1:22:49 PM

Intercontinental Exchange (ICE) $145.85 +4.79% Link ...

Jeff Bailey : 5/21/2007 1:21:52 PM

Brent Crude Hits 7-Month High $70.83/barrel

Jane Fox : 5/21/2007 1:16:11 PM

Here is a divergence between YM and DAX. It will be interesting to see which one leads the other. YM drags the DAX to new daily highs or the DAX drags YM to new daily lows. Link

Jeff Bailey : 5/21/2007 1:12:36 PM

Most Actives ... NYSE:ELN, NYSE:AT, NYSE:S, NYSE:MOT, NASDAQ:DNDN

Jane Fox : 5/21/2007 1:11:13 PM

Well my goodness gracious looks like I was wrong about Oil as well. I thought it was making a lower high and would head back down to retest support and possibly break that support. Link

Jeff Bailey : 5/21/2007 1:10:58 PM

01:00 Internals found at this Link

NYSE volume VERY heavy at this point.

Keene Little : 5/21/2007 1:08:18 PM

Looking at the DOW, as soon as it breaks below the uptrend line from last Wednesday, May 16th, we'll know that that leg up is finished. Whether it will mark the high or just the end of the 3rd wave as I have it labeled on this 30-min chart, we won't know until lower levels are hit. For starters I'd say the DOW needs to get below 13450 to tell us something more bearish is happening. Link

In the meantime I'm expecting to see a flattish correction over to the uptrend line from May 10th, currently near 13525 but up to 13550 tomorrow, followed by the 5th wave up in the rally off that May 10th low. If the ascending wedge pattern is correct then we should see the DOW top out around 13675 by mid week. Higher upside potential is to 13783 by the end of the month (that's where the 5th wave in the rally from March would equal the 1st wave up).

Jeff Bailey : 5/21/2007 1:02:06 PM

01:00 Market Watch found at this Link

Jeff Bailey : 5/21/2007 12:57:05 PM

Chinese State Fund To Buy $3 Billion Stake In Blackstone ... AP Story Link

Jeff Bailey : 5/21/2007 12:53:16 PM

NASDAQ Composite (COMPX) 2,584.29 +1.00% ... has traded a new 6-year high!

Still some room to its all-time high close of 5,046.86 on 03/09/2000.

Jeff Bailey : 5/21/2007 12:45:16 PM

Russell 2000 Index (RUT.X) 834.75 +1.32% ... holding above correlative MONTHLY R1/WEEKLY R1.

Jane Fox : 5/21/2007 12:34:43 PM

Last week the $RUT gave me a "buy the dip" signal from my jtHMA but I didn't take it because my bias was that this market needs to retrace. Well the $Rut has left the station and I was NOT on the train. Link

Jeff Bailey : 5/21/2007 12:19:19 PM

Louis Rukeiser ... wherever you are, the SPX has made it back!

Keene Little : 5/21/2007 12:17:29 PM

You knew that new SPX high above 1527 was coming. Now what? 1552 I guess. In the meantime, with the RUT rallying above 831 it negated the bearish wave count I had on the 60-min chart so now it's a matter of figuring where the next resistance level might be. The daily chart shows the trend line from the March 2000 high through the February 2007 high. This trend line stopped the advance in April and earlier this month. It's currently near 838 so watch to see if price stalls there. Link

The price pattern for the advance from May 16th would look best with a consolidation followed by another leg higher to give us a 5-wave advance from May 16th (to finish THE rally). In that case the higher trend line from May 2006, currently near 846, could be the upside target.

Jeff Bailey : 5/21/2007 12:15:06 PM

History In The Making as S&P 500 threatens its all-time closing high Link

Jeff Bailey : 5/21/2007 12:11:10 PM

Toll Bros. Option Montage (today) with updated OI from Friday's action at this Link

Jeff Bailey : 5/21/2007 12:07:45 PM

S&P 500 Index (SPX.X) 1,527.85 +0.33% ... sticks its head ABOVE all-time closing high!

Jane Fox : 5/21/2007 12:03:08 PM

Here is the Smith Open Number system. Link

Linda Piazza : 5/21/2007 12:02:17 PM

Here comes what may be an important test, as the Russell 2000 rises to test the 4/25 high of 834.89, the 4/26 high of 835.17, and the 5/09 high of 836.99. The RUT is at 834.82 as I type. I actually show a potential upside target of 839.52 on 30-minute Keltner charts, but that's "potential." Remember that the RUT tends to overrun targets somewhat, so a run-up to that Keltner target and drop back below that 835-ish level by day's close would still show that the historical resistance is holding. Be careful now with this test.

Jane Fox : 5/21/2007 11:59:11 AM

Will the bulls ever give up. Yeesh! Link

Jeff Bailey : 5/21/2007 11:53:43 AM

Toll Bros. (TOL) Friday's closing Option Montage at this Link

Keene Little : 5/21/2007 11:51:50 AM

Because of the apparent ascending wedge patterns and negative divergences at new highs, as shown on the DOW 60-min chart, we need to be aware that price could fail, and fail hard, at any time. The first Fib target at 13564 (where the 5th wave in the move up from March = 62% of the 1st wave) has been tagged so that's another warning sign for potential topping here. Link

These ascending wedges can extend higher (as they did into the February highs) and that's why it's important to wait until uptrend lines start breaking before you think aggressively short. The uptrend is clearly still dominant. For the DOW, the important trend line is the uptrend line from April 12th, currently below 13500.

It's possible the DOW will only do a minor correction here and hold above its uptrend line from May 11th, currently near 13510 and rising quickly. The trend line along the highs since March continues to act as resistance but the DOW just keeps inching up higher below that line. We just need to let price lead the way here.

Linda Piazza : 5/21/2007 11:49:00 AM

I corrected the MID prices in my previous post. I was looking at both the MID, topping 900 today, and the NYSE, topping 9900, and gave the prices for the NYSE rather than the MID.

Jeff Bailey : 5/21/2007 11:48:41 AM

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

Linda Piazza : 5/21/2007 11:48:06 AM

I'm signing on for a few moments but only to report that I don't find anything particularly striking yet this morning. Does anyone else feel that monitoring the VXO is more helpful than the VIX lately? The VXO's trend appears clearer. So far, the short-term downtrend that began about 2:00 last Thursday afternoon remains intact. Currently, it looks as if the VXO would have to sustain a move above about 12.50-12.55 to even begin to change that trend. It's at 12.33 as I type.

I see a mixture of evidence elsewhere. Unless my feed is delayed more than I think it is, the USD remains strong against the yen. The MID, the midcap index, has reached a new record, 904.33, currently at 903.86. It's been the momentum index du jour lately, so upward momentum is preserved for the moment. Neither the TRAN nor the BIX is reacting the same way, though, so there's a short-term reason to be vigilant and keep profit-protecting plans in place, but no other evidence at this time. I see a mixture of signs and nothing conclusive as yet. Right here, with the BIX and TRAN reacting as they are, I wouldn't feel safe with new bullish entries in the SPX, OEX or Dow, but with the VXO and MID reacting as they are, I certainly see no evidence that upward momentum has ended, either.

I'm watching for the weight to shift one direction or the other but just don't see anything definitive yet.

Jane Fox : 5/21/2007 11:44:26 AM

The DAX is leading YM downward. Link

Tab Gilles : 5/21/2007 11:36:56 AM

$SPX Note the similarities to 20 years ago. Both pre-election years, two previous years without a bear market.

1987 started on a tear before the famous October crash. Obviously the gains in the '80s period were greater than now as was the decline. But, as the SP tries to set a new record today one has to wonder if a 10% or more correction is due. After all this bull run is the 2nd longest without a 10% correction. Link

Jeff Bailey : 5/21/2007 11:34:53 AM

NH/NL measures for NYSE, NSDQ Comp., SPX and RUT at this Link

Snapshot Analysis: Price action as well as SPX NH hints that we indeed saw some NAKED call squeeze action.

NYSE and NSDQ did see more NL from 05/01/07 benchmark, but that negative breadth may be "explained" as greater focus of buying in recent weeks on the large caps, likely by smart money dollar/yuan. Small caps have "lagged" on price, but NL have not exceeded 05/01/07 benchmark. Small cap bulls want to see NL steady, but build of NH from here.

Keene Little : 5/21/2007 11:20:33 AM

Looking at the NDX price pattern since the March low shows some higher potential if it can get through resistance at the trend line along the highs since November 2006, currently near 1915. 240-min chart: Link

The wave count calls the move up from May 16th as the 5th wave. It will equal 62% of the 1st wave at 1926.40 and equality at 1963.13. So if NDX consolidates near resistance here (by its trend line) and then presses higher, first watch 1926 for potential topping. If it doesn't stop there then the higher Fib level could be the ultimate target.

Jeff Bailey : 5/21/2007 11:20:17 AM

11:00 Internals found at this Link

Jane Fox : 5/21/2007 11:08:14 AM

The H&S is was watching on the NAZ was negated this morning. Link

Jeff Bailey : 5/21/2007 11:06:06 AM

11:00 Market Watch found at this Link

RUT.X "outperforming" a bit today. Friday's "China/yuan" revelation had me suggesting mutual fund investors reallocate their investments, rebalance. Forced to sell some large cap, rotate to small cap.

Jeff Bailey : 5/21/2007 11:01:34 AM

Fitch: U.S. Health Care Regulatory & Legislative Update

DJ- Fitch Ratings' Health Care team has published the inaugural edition of its 'Health Care Sector Legislative and Regulatory Register.'

This report provides a summary and review of key developments in the sector, and is intended to serve as a reference guide for investors evaluating the effect of regulatory and legislative developments on health care industry participants, including providers, manufacturers and distributors.

In this publication, Fitch analyzes the following issues: universal health care; Medicare prescription drug price negotiation; Prescription drug re-importation; and a pathway for generic biologics.

Social issues will become more prominent during the next 18 months, since the Democrats now have control of the Congress. In addition, the 2008 presidential and congressional campaigns are gaining momentum, and health care will remain an important issue to candidates, voters and industry. The cost of medical care continues to rise while the number of Americans without health insurance is increasing. Higher premiums and co-payments are making it difficult for employers to offer health insurance and for employees to afford it.

Fitch will periodically update this report going forward to reflect material developments in the legislative and regulatory environment associated with health care.

The full 'U.S. Health Care Sector Legislative and Regulatory Register - Spring 2007' can be found on the Fitch Ratings web site at .

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, . Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Jane Fox : 5/21/2007 10:58:51 AM

This is your "Get long and hang on" kind of day. Or "Don't even think about been short." Link

Keene Little : 5/21/2007 10:54:30 AM

The techs and small caps are certainly getting some loving today as they lead the market up. Ideally we'll see a day-long consolidation after this spike up that is followed by a final push higher. Right now NDX is approaching its Fib target at 1915.40 but at this point, if it stalls there, it looks like it will be good for only some consolidation.

Jeff Bailey : 5/21/2007 10:56:00 AM

Toll Brothers (TOL) $28.89 +1.19% ... Earnings on Thursday!

Consensus is for EPS of $0.25 on Revenue of $1.12B

Jeff Bailey : 5/21/2007 10:52:02 AM

NVR, Inc. (NVR) $790.00 +1.34% ... gave a reversing higher double top buy signal on Friday at $788.00.

Jeff Bailey : 5/21/2007 10:49:12 AM

Dow Jones (DJ) $51.81 -2.15% ...

Jeff Bailey : 5/21/2007 10:48:31 AM

News Corp. (NWS) alert! $23.90 +0.88% ... Post Dow Jones (DJ) acquisition offer high.

Jeff Bailey : 5/21/2007 10:47:21 AM

Sector Status Changes ... Friday's action had ...

PRECious Metals reversing lower from "bull confirmed" to "bear alert" status.

TEXTiles / Apparel reversing lower from "bull correction" to "bear confirmed" status.

WALL street reversing lower from "bear correction" to "bear confirmed."

Jeff Bailey : 5/21/2007 10:41:25 AM

Alltel Agrees To Buyout for $27.5 Billion, or $71.50 in Cash from Private Equity Group

AT $69.95 +7.26%

Jeff Bailey : 5/21/2007 10:36:17 AM

Elan's Alzheimer's Drug Moves to Phase III Trial

AP Story Link

ELN $19.16 +15.42% ...

WYE $57.86 +2.62% ...

Jeff Bailey : 5/21/2007 10:33:45 AM

Chile To Allow Pension Funds To Invest 45% Of Assets Overseas

Jeff Bailey : 5/21/2007 10:15:55 AM

CME Nov'07 Housing Futures ... 1-point box chart Link

Jeff Bailey : 5/21/2007 10:09:17 AM

CME Nov'07 & Feb'08 Housing Futures Table at this Link

Keene Little : 5/21/2007 10:08:08 AM

With the RUT bouncing a little more this morning, keep an eye on the 828 area for resistance. There's Fib and trend line resistance there (broken uptrend line from March).

Jeff Bailey : 5/21/2007 10:05:55 AM

CME Aug'07 Housing Futures Table at this Link

Jeff Bailey : 5/21/2007 10:02:09 AM

10:00 Market Watch found at this Link

Keene Little : 5/21/2007 9:49:12 AM

With bond yields running higher again today, and with the 10-year having pushed up through 4.8%, we're probably not far from seeing some money rotate back into bonds as money managers decide to take profits in the risky stock market (considering the time of year we're heading into) and lock in some higher yielding bonds. With the stock market stretched as it is to the upside it won't take much selling to start it snowballing back down. But until we start getting some lower lows, stick with the long side (just keep your hand on the exit door handle).

Jeff Bailey : 5/21/2007 9:43:41 AM

Intercontinental Exchange (ICE) $141.10 +1.37% ... closed under the $140 strike on Friday.

Jeff Bailey : 5/21/2007 9:42:05 AM

PetroChina (PTR) $130.91 -0.18% ... WEEKLY Pivot Levels ... $125.78, 128.39, Piv= $130.41, $133.02, $135.04.

Jeff Bailey : 5/21/2007 9:36:02 AM

Baidu.com (BIDU) $134.50 +2.64% Link ... probes a 52-week high.

Jeff Bailey : 5/21/2007 9:32:39 AM

Olin Corp. (OLN) $20.00 +5.23% ... "X gets the square."

Jane Fox : 5/21/2007 9:26:27 AM

The US$ is breaking resistance and now testing its 50EMA. I would not be long Gold here. Link

Jane Fox : 5/21/2007 9:24:42 AM

Gold has found support at December 2006 highs but if the US$ keeps climbing then I'm afraid that support will not hold. Link

Jeff Bailey : 5/21/2007 9:23:46 AM

Weekly/Monthly Index Pivot Matrix found at this Link

Keene Little : 5/21/2007 9:21:51 AM

Friday afternoon's lows will be important to watch in order to tell if we're going to start at least a pullback. As long as those lows hold then the trend remains up.

Jane Fox : 5/21/2007 9:09:56 AM

Link

Jane Fox : 5/21/2007 9:08:09 AM

YM is now testing its overnight lows. Link

Jane Fox : 5/21/2007 9:06:24 AM

Wilshire 5000 is building a bearish flag and MACD is making a bearish divergence just like the other indexes. Link

Jane Fox : 5/21/2007 9:04:44 AM

If the NAZ does not breach its yearly highs and Friday's high does indeed make a lower high we have a head and shoulders pattern setting up with the neckline the support zone I have shown. As I have shown the MACD is also making a H&S pattern but has just made its pattern about 1 week before price. Link

Jane Fox : 5/21/2007 9:01:41 AM

The DOW is in the process of making a MACD bearish divergence but it is certainly not as clear as the one on the SPX divergence. Link

Jane Fox : 5/21/2007 8:59:47 AM

The SPX chart is making a series of higher highs but the MACD is clearly making a series of lower highs and that bearish divergence is as clear as the nose on your face. So then if you read the $RUT chart in the context of the SPX chart then you will have to go with the double top and the MACD making a bearish divergence as well for it is hard to made a bullish case for the $RUT and a bearish one for the SPX. Link

Jane Fox : 5/21/2007 8:57:51 AM

The Russell 2000 cash index chart has become a mess but if you look close enough you can see a double top and sort of a trading range from the March highs at 810-811 to the May highs at 836-837. If you look at the chart as a double top then the MACD is ominous because it did not make a double top but a lower high however, if you look at the chart as a sideways trading range the MACD is falling and that is bullish. Link

Jane Fox : 5/21/2007 8:55:52 AM

Notice also, overnight the DAX has broken its PDH just like the American large cap indexes.

Jane Fox : 5/21/2007 8:54:19 AM

Gold is plunging as the US$ is climbing so those two markets are in sync but Gold and Oil are not. Gold and Oil should move together because the higher Oil goes the more traders think inflation is creeping into the economy and the more they will buy the inflation proof commodity Gold. Of course this is a macro look at this Gold/Oil relationship and should be used more on the weekly charts than on a 20 minute overnight chart. Link

Jane Fox : 5/21/2007 8:45:54 AM

Overnight the large caps were able to break their respective PDHs but the small cap index, Russell 2000, was not. Of course the large caps almost closed at daily highs on Friday whereas the Russell did not. But anyway you look at it the overnight session made higher highs and lows and that is bullish. Link

Jane Fox : 5/21/2007 8:26:49 AM

NEW YORK (MarketWatch) -- Are stocks in a new era? (I keep asking this question). Another hard-assets letter is going with the equity flow - for now.

The Aden Forecast, edited by Mary Anne and Pamela Aden, first came to fame in the great gold bull market that peaked in 1980. And it's been doing well in the new gold bull market that began in 2001. Over the last 5 years, according to the Hulbert Financial Digest, the Aden Forecast is up an annualized 14.78% vs. 9.65% for the dividend-reinvested Dow Jones Wilshire 5000.

But over the last 12 months, as gold has staggered and stocks surged, the Aden Forecast is up only 2.99% vs. 14.52% for the dividend reinvested Dow Jones Wilshire 5000. And in their latest issue, headed "Next Stop ... the Stratosphere", the Aden sisters have reacted decisively. They write: "The market has spoken and the message is very clear ... Since the stock market looks ahead, it's telling us that it sees better times ahead. It's saying that existing problems will be worked out and good times will prevail.'

Jane Fox : 5/21/2007 8:24:28 AM

LONDON (MarketWatch) - Shares of Alltel Corp., the nation's largest U.S. cell-phone provider by geographic area, rose on Monday after agreeing to be taken private by investment firms TPG Capital and GS Capital Partners in a $27.5 billion deal, the largest-ever leveraged buyout deal in the U.S. telecommunications industry.

Little Rock, Ark.-based Alltel (AT) , is for $71.50 per share in cash, a premium of 23% over Alltel's price on Dec. 29, when media reports of a possible buyout first appeared, and 10% over Friday's close.

The deal must be approved by Alltel's shareholders and by regulators. It is expected to close by March 2008

Jane Fox : 5/21/2007 8:18:30 AM

NEW YORK (MarketWatch) -- The Blackstone Group on Monday signaled it's ready to debut its stock within weeks as the marquee private equity firm set its estimated price range in a bid to become the richest U.S. initial public offering in years with about $4 billion in proceeds.

Blackstone confirmed an agreement under which the Chinese government will purchase $3 billion of non-voting common units at a purchase price equal to 95.5% of the IPO price. Beijing will fund the purchase from its foreign-exchange reserves, Blackstone said

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