Option Investor
Printer friendly version
Jeff Bailey : 5/31/2007 12:14:25 AM

RUT 4-point box Link ... After buy signal at 836, has added another at 840. Good field position with room to bullish vertical count of 896 and "Top" of 10-week trading band off the chart. Bullish resistance channel room to 856.

Jeff Bailey : 5/31/2007 12:05:29 AM

Shanghai Composite ($SSEC) Link ... Down 45 points, or -1.13% at 4,007.

Jeff Bailey : 5/31/2007 12:00:05 AM

Hang Seng ($HSI.X) Link ... up 180 points, or +0.89% at 20,474.

Session low/high has been 20,354/20,512.

X's get the square from 20,250 to 20,500.

Jeff Bailey : 5/30/2007 11:27:06 PM

Nikkei-225 ($NIKK) Link ... up 193 points, or +1.10% at 17,781.

Session low has been 17,702. Session high has been 17,869.

X's get the square up to 17,850.

Oh no! That's now been a bearish signal reversed. Now a bullish triangle and a spread triple top buy signal.

1, 2, 3 strikes were out of that EWJ short tomorrow morning.

Jeff Bailey : 5/30/2007 11:11:19 PM

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

Keene Little : 5/30/2007 11:01:00 PM

Thursday's pivot tables: Link and Link

Chart updates (60-min):
continuation bullish: Link
consolidate first then bullish: Link
continuation bullish: Link
consolidate first then bullish (maybe bearish but only if it sells off immediately on Thursday): Link
NDX--looking for a pullback or more: Link
RUT--also looking for a pullback if not the start of the next leg down: Link

OI Technical Staff : 5/30/2007 9:59:59 PM

The Market Monitor has been archived.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

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Jeff Bailey : 5/30/2007 7:04:11 PM

March 21, 2000 FOMC Minutes Link

May 9, 2007 FOMC Minutes Link

Jeff Bailey : 5/30/2007 6:53:45 PM

S&P 500 Index (SPX.X) Closes At All-Time High!

Previous record set on 3/24/2000 at 1,527.46.

Jeff Bailey : 5/30/2007 6:29:48 PM

Closing Internals found at this Link

Jeff Bailey : 5/30/2007 5:46:21 PM

4 US Hostages In S. Nigeria Rleased - Witnesses

Jeff Bailey : 5/30/2007 5:43:56 PM

July Unleaded (rb07n) settled up $0.0056, or +0.26% at $2.1990.

Jeff Bailey : 5/30/2007 5:41:55 PM

July Crude Oil (cl07n) settled up $0.34, or +0.54% at $63.49.

Jeff Bailey : 5/30/2007 5:34:44 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 5/30/2007 5:22:25 PM

US Revised March Oil Use -2.1% Vs. Estimate At 20.529M B/D

DJ- U.S. oil demand was 2.1% lower than previously expected in March and was 0.8% below a year ago at the weakest level since September 2006, government data released Wednesday show.

The Energy Information Administration said total oil demand in the month averaged 20.529 million barrels a day. That's down from its earlier estimate of 20.975 million barrels a day and below the year-ago level of 20.695 million barrels a day.

The year-to-year decline in the month was the first since December 2006 and followed a sharp rise in February of 4.7% from the February 2006 level.

First-quarter demand averaged 20.786 million barrels a day, up 2% from a year ago, but below EIA's earlier estimates that demand grew by 2.6% in the period.

Demand for gasoline, the most widely used petroleum product, set a record for the month of March, at 9.169 million barrels a day. But the revised figure is 1.3% lower than the initial estimate of 9.294 million barrels a day. With the revision, demand was up just 0.4% from March 2006, not 1.8%, as the earlier estimate showed.

Revised first-quarter total oil demand figures were below the 2005 level of 20.844 million barrels a day, EIA data show. The annual growth rate in the quarter was the largest since 2004, when total demand rose by 2.84% from a year earlier.

Gasoline demand in the first quarter averaged 9.028 million barrels a day, up 1.47% from a year ago, the revised figures show. EIA had earlier projected gasoline demand growth in the quarter would rise by 1.9% from a year earlier, to 9.07 million barrels a day.

Despite the downward revision in March gasoline demand growth, the rate of growth in first-quarter gasoline use was the biggest since 2004, when it was 4%.

Demand for distillate fuel - the umbrella group for heating oil and diesel fuel - in March was revised down 1.4% from the earlier estimate, to 4.328 million barrels a day. Distillate demand in the month was 3.4% below a year ago; EIA had projected a smaller decline of 2%.

March distillate demand was the weakest since 2004, EIA data show.

For the first quarter, demand averaged 4.399 million barrels a day, up 1.8% from a year ago. That's the biggest year-to-year gain in the period since 2003, when distillate demand rose 11%, EIA data show. Earlier, EIA had projected 2% year-on-year growth in the quarter.

A steep drop in demand for high-sulfur fuel oil used as home-heating oil overcame a rise in diesel fuel, which set a record high for the month.

March heating oil demand dropped 25.8%, or 335,000 barrels a day, from a year earlier, to 963,000 barrels a day, the lowest March level on record, dating back to 1994.

Demand for diesel fuel - both ultra-low and low-sulfur distillate - was 5.7% above a year ago, at 3.365 million barrels a day, EIA data show.

Jeff Bailey : 5/30/2007 4:41:31 PM


DJ- State-run bank, which is 18.6%-owned by HSBC, posts net profit of $497 billion on higher interest income. Bank aims to slow growth in new loans this year in line with China's tightening measures, after total outstanding loans rise 10.3%.

HBC $93.13 +0.22% ...

Jeff Bailey : 5/30/2007 4:40:15 PM


DJ- The 'hard' property insurance market that made life difficult for homeowners in 2006 eases after a lack of strong hurricane activity last year as premiums fall and coverage broadens, broker Willis Group says.

Keene Little : 5/30/2007 4:16:17 PM

Last week I had pointed out a potential fractal pattern that was playing out in the pullback from last Monday's (5/21) high. This SPX 60-min chart shows the pullback and following rally in the 2nd week of May: Link And this one is for the pullback from last Monday through today: Link

It may help to lay them side by side to see what I'm talking about but very often these fractal patterns will play out the same way. I discounted it last week after the 2nd leg down last week got much larger than in the first pattern. I'm now wondering if I discarded this possibility too soon. Notice that even the rally that followed each of these pullbacks is looking similar. This of course points to new rally highs dead ahead.

At today's close SPX is still shy of last week's high and it's still possible that the bounce today finished its 2nd wave correction. As with last night's setup, we'll know very early tomorrow--it must drop out of the gates tomorrow morning to preserve the bearish wave count. Otherwise continue to buy the dips. I've got some work to do for the charts in tonight's Wrap.

Jane Fox : 5/30/2007 4:12:29 PM

I don't watch the RSI too much but I know Linda does so maybe we can get her to give us her thoughts tomorrow.

Jane Fox : 5/30/2007 4:10:54 PM

... but of course only time will tell however, I still think we are in for a nice little correction.

Jane Fox : 5/30/2007 4:10:01 PM

Keene, I see price making new higher highs since MACD made its high on April 26th so I read the S&P and DOW charts as making bearish MACD divergences.

Jane Fox : 5/30/2007 4:06:48 PM

S&P closes at new all time high surpassing the prior record of 1527.46 set on March 24th, 2000.

Jeff Bailey : 5/30/2007 4:06:18 PM

S&P 100 (OEX.X) 702.99 +0.75% ... prints a close above WEEKLY R1 (702.97).

Jeff Bailey : 5/30/2007 4:05:24 PM

SPY $153.37 +0.74% ... 12 minutes to close. Threatens a 52-week high CLOSE!

Keene Little : 5/30/2007 4:01:37 PM

Jane, yes, MACD and RSI. The only trouble is now I'm starting to wonder, as you've often pointed out, whether we're getting MACD to "reset" by pulling back as price consolidates sideways. We both know that would be bullish.

Jane Fox : 5/30/2007 3:57:37 PM

Keene are you watching the MACD divergences and do they bother you as much as they do me?

Jane Fox : 5/30/2007 3:53:13 PM

DOW to new all time high at 13633.37.

Jane Fox : 5/30/2007 3:52:04 PM

On Friday last week the internals were very bullish and looked like this Link yet price just moved sideways. Tuesday was the same thing, internals very bullish but price did nothing. Two days in a row when the internals were not telling me what was happening got me just a tad disheartened because the internals and especially the VIX/AD volume combo was one of the best setups I have found. Well it looks like they are back in the saddle today and are once again telling me just how things are.

Keene Little : 5/30/2007 3:50:08 PM

The DOW has now rallied above last week's high so that negates the bearish wave count for that one. The others haven't followed yet and I have to wonder if we're getting a repeat performance as we saw last week with the DOW spiking to a new high on Thursday but not confirmed by the others. I'll be more convinced if the SPX can rally above its high at 1532.43.

The media will be very bullish tonight saying the U.S. market beat back the China decline and SPX closed at a record high (above 1527). In the meantime, if there's another nasty surprise out of Asia tonight we could have a situation where the other indices don't confirm the DOW's new high again. Be careful here.

Jeff Bailey : 5/30/2007 3:44:21 PM

INDU alert! 13,618.95 +0.72% ... WEEKLY R1.

Jane Fox : 5/30/2007 3:40:50 PM

The DOW's all time high was made on May 24th at 13624.55. Today's high so far has been 13610.65 but MACD is certainly not keeping up with price and that is a huge red flag for me. Link

Jeff Bailey : 5/30/2007 3:37:46 PM

VIX.X 13.09 -3.25%

VXN.X 17.01 -3.18% ...

Keene Little : 5/30/2007 3:36:48 PM

And here's how the bullish wave count would look on the SPX daily chart: Link By making a projection off the 1510 area (I'm making the assumption for now that that's where the sideways triangle pattern would end), a 62% projection for wave-5 is at 1556, just above the March 2000 intraday high near 1553. Equality between the 1st and 5th waves in the move up from March is just under 1585 and back up to the top of its parallel up-channel by the end of June (not depicted on the chart but you can see where it would be).

But before that happens we should get another pullback, either as part of the sideways consolidation pattern or a stronger leg down to potentially finish a 3-wave pullback from last week's high. The bearish wave count on the daily chart says this bounce will finish the 2nd wave correction to the decline from last week's high and down we go as the next big move.

Jeff Bailey : 5/30/2007 3:36:42 PM

Swing Trade Bullish Call alert ... for an additional ishares Russell 2000 IWM July $83 Call (IOW-GE) at the offer of $2.58.

IWM $83.72 +0.48% ...

Jane Fox : 5/30/2007 3:34:09 PM

Yet when I look at the daily SPX chart I just can't shake that feeling we are headed for a very nice correction. This move up was not even able to get MACD to cross let alone make a higher high. Link

Jeff Bailey : 5/30/2007 3:33:33 PM

US Oil Fund (USO) $48.30 -0.20% ...

Jeff Bailey : 5/30/2007 3:33:07 PM

NOAA's Tropical Storm Barbara ... 5-day Cone Link

Doesn't look to threaten Gulf of Mexico platforms.

Jeff Bailey : 5/30/2007 3:31:19 PM


DJ- Barbara, the second tropical storm of the 2007 season in the eastern Pacific, forms off Mexico's western coast and is forecast to reach hurricane strength in the next 48 to 72 hours.

Jeff Bailey : 5/30/2007 3:30:38 PM


DJ- Gasoline imports are back up to between 1.3 million barrels and 1.5 million barrels a day, and refinery utilization rates are expected to continue to increase, according to the head of the American Petroleum Institute.

Jane Fox : 5/30/2007 3:29:34 PM

I was looking at this chart yesterday and made the prediction that resistance at 837 would hold. Then when I heard the news this morning I was all the more convinced and even went as far as to say support was in jeopardy. Well Mr. Market showed me who was boss. Link

Jeff Bailey : 5/30/2007 3:29:26 PM

News Corp. (NWS) $23.89 +0.71% ...

Jeff Bailey : 5/30/2007 3:28:57 PM

Dow Jones (DJ) $52.74 +1.75% ... BIIIIG volume from 03:00-03:15 with price rising from $52.16-$53.80.

Keene Little : 5/30/2007 3:25:50 PM

If we are going to get more of a sideways triangle consolidation over the next week or two, it might look something like this (or spread out over another week): Link A break below each of today's lows would be a heads up that we've very likely started the next leg down, with each break of the important levels noted on the chart (1516 and 1510) becoming more bearish and a break below 1506 would clearly say we're at least into the next leg down to match last week's decline.

I don't show it on the chart above but keep in mind the other possibility that we'll see price continue to chop its way higher and build an ascending wedge. If the pullbacks remain relatively small and it keeps making minor new highs (starting with a break above last week's) then we'll know that's probably playing out (and would mean a top sooner rather than later).

Jeff Bailey : 5/30/2007 3:18:00 PM

YM 13,607

Jeff Bailey : 5/30/2007 3:15:22 PM

03:00 Internals found at this Link

Keene Little : 5/30/2007 3:06:13 PM

If the market were to roll back over from here (after another failure at the SPX 1527 level (March 2000 closing high), the bearish divergences on the daily chart would continue. Link

Jeff Bailey : 5/30/2007 3:02:54 PM

03:00 Market Watch found at this Link

Keene Little : 5/30/2007 3:01:49 PM

We're there so watch for a potential roll over at any time now. The bearish wave count goes poof with a rally above last week's high so that's where your stop needs to be.

Keene Little : 5/30/2007 2:58:34 PM

SPX hit a high of 1526.35. Close enough to 1526.68? Could be but if it presses a little higher (to enable the DOW to tag its Fib target at 13590-13596) then two equal legs up for SPX from this morning's low (the 2nd a-b-c move up) is at 1528.70. So I'm opening up the Fib resistance zone for SPX to 1526.68-1528.70.

Keene Little : 5/30/2007 2:45:28 PM

Interestingly, the press higher again after the pullback from today's mid-day high, has actually made me a little more bearish again. Without getting overly complicated, the bounce off last Thursday's low can now be counted well as a double zigzag wave count (two a-b-c's separated by an x-wave) which fits well for a 2nd wave correction against last week's decline. For this wave count the DOW should fail at or below 13600 so we'll see.

Keene Little : 5/30/2007 2:39:15 PM

The last 3-wave bounce we had off last Thursday's low stopped dead at its Fib target at SPX 1522 (two equal legs up and 62% retracement of last week's decline). The new upside Fib target, where the current leg up reaches equality with the leg up from last Thursday to yesterday morning's high, is at 1526.68 which is right on top of the 78.6% retracement. It should be a good short setup there for another leg back down. Just keep trading short term here. Link

Jeff Bailey : 5/30/2007 2:12:27 PM

02:10 Market Watch at this Link

Keene Little : 5/30/2007 2:10:19 PM

Broken downtrend line now support? Link DOW just got a big bounce off it so we'll see if it holds. In reality I expect a lot of chop if a sideways triangle consolidation plays out.

Jeff Bailey : 5/30/2007 2:08:27 PM

FOMC Minutes from (3/20-3/21/07) at this Link

Jeff Bailey : 5/30/2007 2:07:51 PM

FOMC Minutes (5/09/07) at this Link

Jeff Bailey : 5/30/2007 2:06:14 PM

Testing trend #7.

Jeff Bailey : 5/30/2007 2:05:52 PM

YM 13,512 ... getting hit.

Jeff Bailey : 5/30/2007 2:05:03 PM

Yesterday's RUT.X NH/NL was 62:7

It's 10-day NH/NL ratio reversed UP yesterday at 66.0% with 67.6% measure.

Jeff Bailey : 5/30/2007 2:02:37 PM

IWM $83.30 -0.03% ... 15-minute interval chart at this Link

Cut back on bull calls until $83.52-ish gets taken out. We've seen it twice.

Keene Little : 5/30/2007 2:01:01 PM

The drop from today's high has now overlapped the top of the first bounce off this morning's low. That overlap has now left today's rally as another 3-wave bounce. It's beginning to look more and more like we're going to get a sideways triangle (but a little smaller than the one I showed for the DOW earlier) before getting another rally out of this (probably next week).

That kind of move would set up the final 5th wave rally in the move up from March as shown by the bullish (green) wave count on the DOW's daily chart here:

Depending on how much it pulls back (vs. going sideways) I'll then be able to make a price projection for the 5th wave (assuming this is how it's going to play out from here). If the end of 4th wave correction were to be near 13400 then equality between the 1st and 5th waves would be close to 14K. That would be one heck of a run from March's low of 11940 (+17%). The comparison to 1929 just keeps getting closer and closer... Link

Jeff Bailey : 5/30/2007 1:52:54 PM

Dynamic Materials (BOOM) $35.39 +0.97% ... best levels of the week.

Jeff Bailey : 5/30/2007 1:47:27 PM

Swing trade bullish call exit alert after that kiss of $83.50. Exit half of the iShares Russell 2000 IWM July $83 Calls (IOW-GE) at the bid of $2.36.

IWM $83.33 (unch)

Jane Fox : 5/30/2007 1:43:42 PM

I am a believer in trend as well and why I use monthly/weekly jtHMA charts to tell me the larger trend and then the daily/120 minute/60 minute jtHMA charts to help me time "buy a dip" or "sell a rally" entry according to the larger trend. Link

Jeff Bailey : 5/30/2007 1:35:59 PM

YM 13,555 ... 15-minute interval chart back to May 11th. 8 different upward trends. 2 downward trends Link

I am a STRONG believer in TREND (the trend is your friend), but hopefully you can see that trend by itself isn't as "clear" as some make it out to be.

One of the better uses of trend is for it to hold on 3rd test, get some credence as if it is being traded.

Then when broken down/up, monitor for resistance/support.

Jeff Bailey : 5/30/2007 1:11:26 PM

01:00 Internals found at this Link

Keene Little : 5/30/2007 1:07:37 PM

With a push back up it opens up a few different possibilities for the intermediate term. The bounce off last Thursday's low to yesterday morning's high is a clear 3-wave bounce. That's a corrective move and suggests a couple of different scenarios which doesn't help a whole lot for short term direction from here. I'm not going to draw out all the possibilities because frankly it'll look too confusing.

First the bearish possibility after this bounce--as long as last week's high is not violated we could be in a larger 2nd wave bounce (instead of it finishing at yesterday morning's high) and once this leg up is finished we'll head back down in a hurry.

The bullish possibilities are several. If the market were to chop its way higher from here to new all-time highs then it would likely form an ascending wedge and we'd find a top sooner rather than later (in a week or two). But if we do see the market drop quickly (like the bearish possibility mentioned first) then it might be wave-C of a larger A-B-C pullback from lat week's high. From there we could get a new rally leg to a new all-time high sometime in the summer.

Or, as depicted on this 60-min chart, we could do a larger sideways triangle consolidation into June to be followed by another rally to a new all-time. Continue to trade short term until an answer becomes more obvious. For now, once this leg up is finished (and 13596 makes a good upside Fib target) it should be a good setup for another leg down. Just keep in mind that if we're going to do a sideways consolidation, as depicted, we may have already seen the high for the bounce. Link

Jeff Bailey : 5/30/2007 1:02:50 PM

01:00 Market Watch found at this Link

Jeff Bailey : 5/30/2007 1:00:10 PM

ER's downward trend was 839.

Jeff Bailey : 5/30/2007 12:56:46 PM

If institutions were going to sell today, they should have done it at YM 13,545.

Downward bar chart trend was 13,555

Jeff Bailey : 5/30/2007 12:54:46 PM

Don't do it Keene! ...

Keene Little : 5/30/2007 12:45:44 PM

Sometimes I think I should just abandon all technical indicators and tools and just trade off trend lines.

Keene Little : 5/30/2007 12:44:53 PM

The DOW is back up for another (higher) test of its broken uptrend line from Thursday's low. What is it about the DOW's ability to ride up underneath its broken uptrend lines? Link

Jeff Bailey : 5/30/2007 12:35:30 PM

YM 13,572

Jeff Bailey : 5/30/2007 12:34:11 PM

IOW-GE $2.42 x $2.45

Jeff Bailey : 5/30/2007 12:33:22 PM

IWM $83.40 +0.08% ... from 4/23 and 4/24 MM Postings, pretty good idea that $83.50 is the big test now.

Jane Fox : 5/30/2007 12:31:43 PM

Bears fumbled the ball earlier and now the bulls have grabbed it and are running for a touchdown. Link

Jane Fox : 5/30/2007 12:29:53 PM

ES and YM are now testing their PDHs. Link

Jane Fox : 5/30/2007 12:28:37 PM

All markets have peeked above their respective PDRs except NQ. Link

Jane Fox : 5/30/2007 12:27:30 PM

13 ticks is $130.00 per contract.

Jane Fox : 5/30/2007 12:27:14 PM

839.50 sorry

Jane Fox : 5/30/2007 12:26:59 PM

Target hit at 837.50.

Jane Fox : 5/30/2007 12:26:40 PM

My long from 838.20 has now got to within 2 ticks of profit so stop snugged up.

Jane Fox : 5/30/2007 12:25:45 PM

Stop raised to 838.4 so lock in 2 ticks.

Jane Fox : 5/30/2007 12:24:29 PM

WE are moving into the Twilight Zone (lunch hour).

Jane Fox : 5/30/2007 12:23:58 PM

Let's lower the target to 837.50

Jane Fox : 5/30/2007 12:23:01 PM

BTW the short that I had at 835.80 is now off the table. You did know that of course.

Jane Fox : 5/30/2007 12:21:42 PM

Raising my stop to 837.3

Keene Little : 5/30/2007 12:21:00 PM

The little bounce we're getting in gold today looks like another bear flag. Each bounce since it topped out in April continues to look like a corrective bear flag. As long as that continues I'll stay bearish the shiny metal. But if you're short gold be aware of the 200-dma that is currently offering support (for the June contract). GLD still has a way to go before hitting its 200-dma, currently at 63.09 (64.77 is its current price).

Jeff Bailey : 5/30/2007 12:17:40 PM

IWM $83.20 -0.15% ...

Jeff Bailey : 5/30/2007 12:17:12 PM

YM short stop alert 13,549

Jeff Bailey : 5/30/2007 12:11:36 PM

YM 13,537 ... still below its DAILY and WEEKLY Pivot.

Jane Fox : 5/30/2007 12:11:28 PM

I certainly expected much more of a reaction to the overnight news than we are currently getting. Link

Jeff Bailey : 5/30/2007 12:10:59 PM

If you'r long the Russell and short the YM, you feel some pressure here.

IWM $83.16 -0.20% ... it too above DAILY Pivot and WEEKLY Pivot.

Jane Fox : 5/30/2007 12:10:02 PM

Don't forget the FED minutes at 2:00EDT. That is usually a market mover.

Marc Eckelberry : 5/30/2007 12:11:14 PM

ISEE is only long equity options, whether puts or calls. No index hedging. That is specifically why it was created, to show true speculative sentiment.

Jane Fox : 5/30/2007 12:07:55 PM

Notice I said as we move into profit not "if." That is called positive thinking.

Keene Little : 5/30/2007 12:07:32 PM

The ISEE data is also neutral. We've got several that are bearish, several that are bullish and a bunch that are neutral. I'm struggling to find some reliable sentiment indicators right now, especially with the discrepancy between various measures. Part of the problem is that more and more people now know what a put option is and shorting strategies. Hedging (vs. speculation), especially by the hedge funds, can really distort the measurements. It's making it harder to use sentiment data as part of a market timing tool.

Jane Fox : 5/30/2007 12:07:11 PM

I will move the stop up as we move into profit.

Jane Fox : 5/30/2007 12:06:46 PM

Long from 838.20 STop is 836.70 Target is 839.70

Jeff Bailey : 5/30/2007 12:04:49 PM

YM 13,533 ... day trader's 5-minute interval chart with MONTHLY/WEEKLY/DAILY Pivot retracement at this Link

Marc Eckelberry : 5/30/2007 12:02:09 PM

ISEE: Link

Marc Eckelberry : 5/30/2007 12:01:25 PM

Keene, of course no one is bearish like we would be at a 10% pullback. But we are bearish in sentiment considering where we are. Normally, a bull market like this would see much more optimism. And that is whay we keep going higher. Wait for ISEE 200 before even thinking people are overly bullish.

Jane Fox : 5/30/2007 11:59:47 AM

VLO is finding support at its 20EMA which has been support since January, if you ignore the outlier on March 5th that is.

Macd is certainly telling me this market will not be making new yearly highs any time soon though. Link

Jane Fox : 5/30/2007 11:56:15 AM

This is what is causing all the heartache us Goldbugs are currently experiencing. Link

Keene Little : 5/30/2007 11:55:38 AM

Marc, you say everyone is bearish and that's a reason the market will rally. Any data behind that statement? Most of the data I've seen suggests most are very bullish and pretty much fully invested. The hedge funds are at a near record net long position according to the ISI (International Strategy and Investment). This data has shown the hedge funds are not much different from you and I and typically a high net long/short position has done a good job at identifying the market top/bottom.

But Barton Biggs (who is bullish) had an article around the middle of the month in which he stated sentiment data is inconclusive. As he said, "Consider the U.S. market indicators. Each week, we track 28 of them. As of last week, 12 were neutral, 5 were oversold and 11 were overbought or near overbought. Of the five that are oversold, there are some potent measures (notably CBOE Equity Call/Put ratio, Net Futures Positioning on the NASDAQ and the New York Stock Exchange Short Interest Ratio). In the past, when these indicators were oversold, 90 percent of the time equities rose 10 percent over the next six months. Still, our composite of the indicators that have worked best is neutral. There is no pattern."

Hence the reason for my question to you about what data you are referring to when you say everyone is bearish.

Jane Fox : 5/30/2007 11:54:38 AM

Crude seems to be finding support at the confluence of the 200 and 100 EMAs. Link

Jane Fox : 5/30/2007 11:53:12 AM

Pretty sick looking chart here I'm afraid. Sigh! Link

Jane Fox : 5/30/2007 11:46:35 AM

I will take ER long at 838.20.

Jane Fox : 5/30/2007 11:45:18 AM

Raising the short to 835.80.

Jeff Bailey : 5/30/2007 11:45:12 AM

YM 13,545 ... 2nd test

Jane Fox : 5/30/2007 11:44:38 AM

YM is finding resistance at its weekly open. ER is well above its weekly and daily open. ES is above both is weekly and daily open as well. Link

Jeff Bailey : 5/30/2007 11:42:06 AM

RUT.X ... 836.13 -0.16% ... holding ABOVE DAILY Pivot.

Keene Little : 5/30/2007 11:41:04 AM

Marc, it might be from DOW 20K ;-)

Marc Eckelberry : 5/30/2007 11:40:57 AM

I still think COMP will get up to 2640, before we get a real summer correction if there is to be one.

Marc Eckelberry : 5/30/2007 11:39:37 AM

I have heard that since SPX 1400/1450, Keene. Yes, we will have a global sell-off, but it could be next year and it could be at DOW 15K. Right now, the trade to be in is long on pullbacks until proven otherwise. Stops are easy now, just under SPX 20 DMA (1510).

Jane Fox : 5/30/2007 11:38:24 AM

Internals are bullish but AD line is still under 0 so even though the bears fumbled the ball the bulls have not recovered it yet. Link

Jane Fox : 5/30/2007 11:35:49 AM

I will be going short ER at 835.30.

Keene Little : 5/30/2007 11:34:38 AM

Actually Marc I think all asset classes will sell off this time. We've seen just about everything rising together over the past few years so it'll go in reverse. It's just a matter of when.

Jeff Bailey : 5/30/2007 11:34:20 AM

YM short alert here at 13,535. Stop 13,549. Target 13,501.

Jane Fox : 5/30/2007 11:32:39 AM

YA gotta just love that VIX! Link

Keene Little : 5/30/2007 11:29:07 AM

That last thrust higher has now broken the downtrend lines from yesterday morning so abandon the short side for now.

Keene Little : 5/30/2007 11:28:19 AM

Offering an opposing view to Marc's comment on the Chinese market (11:06), it's not so much the problem with the Chinese market as it is with investor mood. With the world stock markets having had a strong run it won't take much of a mood change to get people to start taking profits off the table. A drop in the Chinese market could be a factor in that kind of mood shift. And that's the key, not necessarily that the Chinese stock market dropped.

It's similar to the subprime mortgage problem--that's a relatively small market and many are saying it will be contained. What they're failing to realize is the impact on the broader mortgage market and the tightening in lending standards as a result of the subprime problem. It has caused a mood change in the bankers.

Jeff Bailey : 5/30/2007 11:27:30 AM

YM 13,537 ... big test coming at 13,545

Jeff Bailey : 5/30/2007 11:25:20 AM

SPX.X 1,518.70 +0.03% ... gets green.

Marc Eckelberry : 5/30/2007 11:15:55 AM

ES, NQ and YM are still sitting in the morning's gaps, no real resolution and probably none lasting until 2 PM, Fed minutes. Just watch SPX 1510. Long above, short below, but always keeping in mind that there are zillions of buyers waiting for better prices. There is a huge amount of cash on the sidelines, thanks to the bearish press since March.

Jeff Bailey : 5/30/2007 11:13:59 AM

11:00 Internals found at this Link

Marc Eckelberry : 5/30/2007 11:11:59 AM

As long as SPX holds the 20 dma (now 1510), that has been tested three times, being short is dangerous and only a daytrade.

Marc Eckelberry : 5/30/2007 11:10:13 AM

Anyone who thinks we have already seen the highs is going to have a suprise in the coming months.

Marc Eckelberry : 5/30/2007 11:06:27 AM

Only 10% of chinese are in the China stock market and foreigners are banned. There is zero effect on world economies and China's economy other than more money pouring in to the safety of US big caps and bonds. SPX holds 1510, 20 dma and that is all you need to know. As for gold, demand will actually increase as orientals love putting their money in gold and infaltionary pressures are great worldwide. Crude oil is also starting a new bid. If China demand is slowing, why is oil up? Just all a bunch of nonsense.

Jane Fox : 5/30/2007 11:03:46 AM

Of course all that bearishness was bought into and the markets closed very near their daily highs yesterday.

Jeff Bailey : 5/30/2007 11:02:46 AM

11:00 Market Watch found at this Link

Jane Fox : 5/30/2007 11:02:36 AM

Some days the TRIN is helpful and others it is now. Yesterday it was because it forwarned us of the bearishness we saw.

Jane Fox : 5/30/2007 11:01:47 AM

TRIN made a high of 2.60 this morning but is now at 0.81 and hovering around daily lows.

Keene Little : 5/30/2007 10:45:53 AM

At this point you want to be short against this morning's highs. Any higher and I would switch sides.

Keene Little : 5/30/2007 10:37:25 AM

As we head into the lighter volume trading months of the summer we can expect the market to get jammed in both directions a lot easier. So far it's been jammed back to the upside to get a lot of the shorts out of the way. As long as those downtrend lines hold then you'll want to stay on the short side. If those downtrend lines break then buy the pullbacks instead.

Jeff Bailey : 5/30/2007 10:31:26 AM

TRIN 0.84 -33.33% ... probing WEEKLY Pivot.

I am "surprised."

Jane Fox : 5/30/2007 10:28:33 AM

SAN FRANCISCO (MarketWatch) --- Gold futures headed lower Wednesday, set for their first loss in three sessions as traders fretted about the potential for a slowdown in Chinese demand after that nation tripled taxes on stock trades.

Chinese officials are 'dead-serious about curbing rampant speculative fever in that country's red-hot stock markets.'

Gold cannot ignore the China factor, he said in e-mailed commentary. "There is too much at stake in the potential slowdown of that juggernaut, just as critical as the previous assessments were about the never-ending consumption party of all kinds of commodities."

Gold for June delivery was last down $4.60 at $652.60 an ounce on the New York Mercantile Exchange. The contract had gained $3.90 during a two-session win.

Jeff Bailey : 5/30/2007 10:25:05 AM

EIA: Weekly Petroleum Status Report will be released tomorrow morning at 10:30 AM EDT.

Keene Little : 5/30/2007 10:22:49 AM

SPX 1518 is its downtrend line.

Jeff Bailey : 5/30/2007 10:22:48 AM

MBA's Weekly Application Survey found at this Link

Keene Little : 5/30/2007 10:21:29 AM

The downtrend lines from yesterday morning's highs should not be broken if this is to remain bearish. For the DOW that's at 13521 right now.

Keene Little : 5/30/2007 10:19:06 AM

This bounce has gone about as far as it can and still remain bearish. The next leg down from here will be a screamer if the bearish pattern is correct. Otherwise another leg up to match the bounce from last Thursday to yesterday's high can be expected.

Jeff Bailey : 5/30/2007 10:15:55 AM

150-day SMA alert ... SPG $107.41 +1.90% ...

Jeff Bailey : 5/30/2007 10:13:36 AM

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

Keene Little : 5/30/2007 10:12:13 AM

It looks like they're going to make it a challenge to get short this morning. I'd be very surprised to see this morning's gaps get closed and the next Fib targets for the bounce (2nd leg = 162% of the 1st leg up) are ES 1519.75, YM 13526 and NQ 1904.50. Also watch the 62% retracements of the drop from yesterday afternoon's highs.

Jeff Bailey : 5/30/2007 10:06:42 AM

NASDAQ a/d 827:1810

Jeff Bailey : 5/30/2007 10:06:31 AM

NYSE a/d 1058:1855

Jeff Bailey : 5/30/2007 10:02:26 AM

10:00 Market Watch found at this Link

Keene Little : 5/30/2007 10:01:04 AM

ES just tagged the level where this morning's bounce has two equal legs up at 1517.50 (YM's is at 13508 and NQ'S is at 1899.25) so watch for topping (or not) here.

Jeff Bailey : 5/30/2007 9:51:15 AM

TRIN 1.13 -10.31% ... was quite "bearish" yesterday considering a/d line for NYSE.

I'm thinking it would be tought to see below 1.00 today.

Jeff Bailey : 5/30/2007 9:45:52 AM

IXTCX -0.91% and HUI.X -1.0% are precentage losers early.

Keene Little : 5/30/2007 9:45:26 AM

If you want to short this little bounce, a reasonable stop is just above the highs put in just after 8:00 AM.

Jeff Bailey : 5/30/2007 9:43:57 AM

S&P Retail Index (RLX.X) 520.78 +0.20% ... inches green.

Jeff Bailey : 5/30/2007 9:41:48 AM

iShares Japan (EWJ) $14.34 -0.62% ... "no harm, no foul" at this point. See 5/24/07 short entry.

Jeff Bailey : 5/30/2007 9:39:27 AM

PetroChina (PTR) $126.50 -1.28% ...

Jeff Bailey : 5/30/2007 9:37:56 AM

AMEX Biotech (BTK.X) 819.76 +0.13% ... green early.

Jeff Bailey : 5/30/2007 9:33:00 AM

Aluminum Corp. China (ACH) $31.65 -3.88% ...

Jeff Bailey : 5/30/2007 9:31:05 AM

Hang Seng ($HSI) Link ... finished down 175 points, or -0.86% at 20,294.

Keene Little : 5/30/2007 9:29:52 AM

We'll probably get a decent little bounce off last week's lows and it will be a good shorting opportunity. Shorting it in the hole is always difficult because you need to open up your stop real wide. That's obviously risky. Look for a small bounce and use the high of the bounce as your stop, even it's within the first 5-10 minutes of trading.

Jeff Bailey : 5/30/2007 9:29:23 AM

Shanghai Composite ($SSEC) Link finished down 281 points, or 6.5% at 4,053.

First sign of any real weakness would be 3,850.

Jeff Bailey : 5/30/2007 9:21:32 AM

Pfizer (PFE) 2.54 million shares blocked at $27.56

Jeff Bailey : 5/30/2007 9:18:34 AM

Exxon/Mobil (XOM) 987,000 shares blocked at $82.62.

Jeff Bailey : 5/30/2007 9:17:44 AM

General Motors (GM) 2.86 million shares blocked at $30.10.

Jeff Bailey : 5/30/2007 9:17:16 AM

Wal-Mart (WMT) 2.39 million shares blocked at $46.94 pre-market.

Keene Little : 5/30/2007 9:12:02 AM

I half jokingly said in last weekend's Market Wrap that China and/or Greenspan would get the blame for any sell off in our market. Yesterday's setup at the close was for a 3rd of a 3rd wave down to start today and I said we'd know very early this morning if it's true. Looks like it is. Don't be looking to buy the dip today as we should see the decline continue--look to short the rallies since it should stair step lower for a bit to finish the EW count for this next leg down. Then we'll set up for a tradeable bounce, maybe tomorrow or Friday.

Jane Fox : 5/30/2007 9:10:43 AM

The DOW's February highs is now sitting at the 50% retracement of the March to May move. The NAZ's 23.60% retracement is now sitting at its February high and the Wilshire 5000's 38.20% retracement is now sitting at its February highs.

Jane Fox : 5/30/2007 9:08:00 AM

The Wilshire 5000 has found support at its magenta 20EMA just like the SPX. But what I find interesting is the Fibonacci 38.20% level, right at the February highs. HMMMM Link

Jane Fox : 5/30/2007 9:03:06 AM

The NAZ composite has tested its support zone three times now and each time it was a higher low unfortunately though MACD was making a lower low with each test. The news out of Shanghai today could force this market to test this support zone again.

Notice the 23.60% retracement is sitting right the February highs. Link

Jane Fox : 5/30/2007 8:54:50 AM

The DOW's 50% retracement of the move from the March lows to the May highs is sitting right at February's swing high. MACD is also telling us a retracement to at least the 23.60% level at 13225 is quite likely. Link

Jane Fox : 5/30/2007 8:51:08 AM

There is a very good chance the SPX head and shoulders pattern I showed yesterday morning will confirm and that this market will close below its magenta 20EMA today. Even if it does though, the SPX needs to move down to around 1490 before it tests its 23.60% retracement. A long way to go before one can call this market bearish. Link

Jane Fox : 5/30/2007 8:45:07 AM

My stance has been that the Russell 2000 cash index would remain in this trading range and that the MACD was telling me the upper trendline would hold as resistance. Of course I didn't know the Chinese Government would make such an overt move to cool its stock market overnight making that prediction all the more likely now. Link

Jane Fox : 5/30/2007 8:37:45 AM

WASHINGTON (MarketWatch) -- U.S. private-sector jobs grew by 97,000 in May, according to the ADP employment report released Wednesday.

The report suggests U.S. nonfarm payrolls rose about 123,000 in May after adding in government jobs, a bit less than the 150,000 estimated by economists surveyed by MarketWatch. The nonfarm payrolls figure will be released on Friday.

In May, services-producing jobs increased by 120,000, while goods-producing jobs fell by 23,000, ADP said. Manufacturing firms cut 10,000 jobs, the least since November.

Large businesses added 8,000 jobs in May, the first increase since November. Small businesses added 58,000 workers, and medium-sized companies added 31,000.

April's ADP figure was revised low to 61,000 from 64,000, still the lowest in four years.

Jane Fox : 5/30/2007 8:36:56 AM

US $ is climbing and Gold is falling so those two are in sync. Also notice the DAX's overnight range has been entirely below its PDL. Link

Jane Fox : 5/30/2007 8:22:38 AM

The news out of Shanghai explains why the overnight session was so bearish. Link

Jane Fox : 5/30/2007 8:20:53 AM

SHANGHAI -- The Chinese government's first direct action to trim a surge of stock-market investment offered another sign of Beijing's growing concern about the run-up and led to the market's second-biggest decline this year, but it may not be enough to cool things down.

Acting on orders from Premier Wen Jiabao's cabinet, China's Ministry of Finance early Wednesday tripled a trading transaction charge, called the stamp tax, to 0.3% from 0.1%, effective immediately. The government is keen to promote the healthy development of the country's securities markets, the official Xinhua News Agency said.

In response, Chinese stocks marked a broad-based decline in heavy trading, as the benchmark Shanghai Composite Index finished down 6.5% at 4053.09. It was the worst performance since an 8.8% fall in the index on Feb. 27 that rattled investors world-wide. It was the second-biggest drop since 1999.

Market Monitor Archives