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Keene Little : 7/11/2007 11:48:34 PM

Thursday's pivot tables: Link and Link

Daily chart updates tonight to keep track of where we are in the bullish vs. bearish wave counts:
DOW: Link
SPX: Link
NDX: Link
RUT: Link

OI Technical Staff : 7/11/2007 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The Market Monitor has been archived.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.

Marc Eckelberry : 7/11/2007 9:54:00 PM

I won't be posting anything tomorrow (meetings all day), just watch that COMP trendline R at 2663. So far, no engulfing candle still leaves this bump as a question mark. Lots of earnings next week and lots of optimism going into it. ISEE shows still large amounts of equity call buyers on these drops, unlike April and May when we had very low readings and disbelief. Regular readers know that I was very bullish back then, even in June and pushing you to buy pullbacks. I don't feel that way anymore. The game is turning and the easy money (buy and hold) was made on the long side.

Marc Eckelberry : 7/11/2007 9:48:43 PM

COMP: Link

Again, I urge caution. The Q's were not dropped enough to set up a big call squeeze next week, which could cast a shadow over opex. Obviously, there was a nice short and most of you took your profits at my target of 10 dma. Too much news next week to have a complete breakdown, as noted here yesterday: Link The drop at 1PM was on a MOT leak. Reflexive buying ensued, but this is no time to start buying every dip blindly other than day trading it (I also noted that VXN at weekly R2 was reversal time Link I much prefer waiting for shorting opportunities at this stage of the game. It remains to be seen if this rally will hold. If it does, daytrade it, don't put overnight bullish trades behind it.

Jeff Bailey : 7/11/2007 6:36:00 PM

That seems to echo what Fed and Treasury officials said today in regards to subprime issues on broader scale. Nothing new there, consistent with recent comments.

Does seem to be having some impact on corporate junk bond offerings though.

Big liquid market, will work through eventually.

Jeff Bailey : 7/11/2007 6:32:59 PM

SEC's Market Regulation Chief: ... saying BSC's troubled hedge funds should be able to "unwind in an orderly fashion."

Jeff Bailey : 7/11/2007 6:10:37 PM

PetroChina (PTR) $157.33 +0.47% ... Updated bar chart and the "crazy" green retracement Link

Always wondered "why?" Then discovered WEEKLY and MONTHLY Pivot retracement levels.

Sold long the Sep $145 Call PTR-II on 6/26 (from 6/5/07 entry). Was left with a NAKED July $155 put PTR-GK. Closed that bugger out on 06/28/07 as RISK was too great if stock moved above GREEN 61.8%.

Jeff Bailey : 7/11/2007 5:56:09 PM

Good Gravy Keene ... CME's WEEKLY R1 is $591.20. That's 1, 2, 3, 4 ... 4 levels all pointing to $590.

Jeff Bailey : 7/11/2007 5:45:56 PM

Hedge Funds Gain Through Derivatives

DJ- Activist hedge funds, looking to control big stakes in companies to have the credibility to push for major changes, are buying derivatives at a fraction of what it would cost to buy shares, making it easier for them hunt larger prey.

Jeff Bailey : 7/11/2007 5:24:46 PM

Closing U.S. Market Watch at this Link

Jeff Bailey : 7/11/2007 5:20:20 PM

Hey Keene (04:00:52)! ... $589.35. That's darned close my green 50% and red 100%.

Much above $600 could be an A, B, C, U ($610) ... la ($645) ... ter ($680).

Jeff Bailey : 7/11/2007 5:04:46 PM

Hmmm ... CME and ICE fighting over BOT. Stocks do relatively nothing during battle, despite very active commodity futures trading the past couple of months.

Deal's done, let's have some fun?

Jeff Bailey : 7/11/2007 5:03:43 PM

Intercontinental Exchange (ICE) $167.07 +7.28% ... That's an all-time high close. Bear's bracket is 100% retraced. Bullish Vertical count column under construction today. X's from $156-$166. Link

Jeff Bailey : 7/11/2007 4:49:17 PM

CME bar chart with volume turned on. "Bear's" retracement is red, and it looks like they might be turning, rethinking things at 61.8%. "Bull's" is green and the recent column of O from the PnF chart has established the bullish vertical count column of X's from $536-$580 (see today's 11:11:44). Here's that bar chart Link

Old saying is that "volume proceeds price."

PnF chartists know this to be true, as the science of ballistics is the foundation of bullish and bearish vertical/horizontal counts.

Volume becomes somewhat of the "powder keg." Major disagreement among buyers and sellers on where this one is headed. For every buyer there's a seller. Right?

The loooong column of X, which is the bullish vertical count is the length of the barrel.

The stock is the projectile.

Jeff Bailey : 7/11/2007 4:28:51 PM

Anything else trade its MONTHLY R2 this month, then pull back to MONTHLY R1?

Jeff Bailey : 7/11/2007 4:25:07 PM

Good gravy ... 4.1 million shares in CME $580.05 +3.43% today.

Jane Fox : 7/11/2007 4:08:30 PM

Who let the bulls out!!!

Jane Fox : 7/11/2007 4:08:18 PM

ER and NQ to new daily highs. ES is testing daily highs.

Jeff Bailey : 7/11/2007 4:08:58 PM

Email Question:

Jeff & Keene:

I am new to Market Monitor. I need to learn to understand your quot;trade call" style. What call did guys make today and precisely what and when? I could follow Jane- she called 3 trades- I think.

See my response in today's 03:40:33.

In addition, by following my trades each day, I have to look at them. Good and bad. The "bad" I try NOT to keep duplicating, understand, and analyze what went wrong. The good? Well, thats the theme we try to exploit and build upon. Stick with what's working until it stops working.

Keene Little : 7/11/2007 4:00:52 PM

Update to CME's daily chart from yesterday--the leg up today looks like it could finish a 5-wave move up from June 27th, with a Fib projection at 589.35 for the completion of an A-B-C move up from the May low. The bearish wave count then calls for a strong decline that will take CME well below 500. Link

The bullish wave count suggests the rally could continue higher than 589, or if it pulls back first it will likely be a choppy sideways/down correction. The broken uptrend line from 2005 through the August 2006 low is currently just above the 589 Fib target so watch for a potential kiss goodbye there.

Jeff Bailey : 7/11/2007 3:58:08 PM

Keene ... more email! ;)

Jeff Bailey : 7/11/2007 3:47:13 PM

CME is/was #37 weight in XLF

Jeff Bailey : 7/11/2007 3:42:54 PM

Going to test the resolve of aggressive shorts ...

Jeff Bailey : 7/11/2007 3:41:59 PM

Nice little move today in CME $580.00.

Jeff Bailey : 7/11/2007 3:40:33 PM

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

"B's" are INITIAL bias Benchmark of underlying security.

Actual positions OPEN are (from top to bottom) XBA-GG, ACH-WF, ACH-WF, ZPY-XN, OLN-AD, OLN-AD, EBAY, PBT, XLF-TK (2), XLF-TK (1), USEG, DAW-HE, DAW-HE, CME.

I've tried to teach trader's over the years to utilize account/risk management. This is ONLY done with position size.

Its a tough job for a newsletter analyst like myself. Who is my audience?

Is it a trader with a $2,000,000.00 account, or $2,000 account?

I "run" my MM profiles like this, so that ANY account size can trade my profiles in a REALITY environment. No "unlimited amount of funds" for me. As one of the MOST IMPORTANT parts of trading/investing is SPREADING risk.

I start with this.

$10,000 is a nice round number, that ANY sized trading account can divide by.

One basic rule of RISK management is that a trader/investor should have NO MORE that 10% of their capital in any ONE (1) security. We always assume a STOCK, say... Enron, could go to $0.00. If that one position does go to zero, can the account survive?

With $10,000.00 "defined" as a FULL Position, when I give a trade alert SWING TRADE LONG, or DAY TRADE LONG, the DEFAULT is full position. Based on market conditions, OPEN MM Profile structure, I may actually say 1/4, or 1/3, or 1/2, or 2/3, or 3/4. A trader can quickly see $10,000.00 divided by any of these fractions. 1/4 = $2,500.00 etc.

Since I have to assume that ALL of my trade profiles are being taken, I HAVE to run my OPEN MM profiles as if it is YOUR account.

For OPTIONS! And this is SO important.

IF a "full position" is equivalent to $10,000, then a full position for an OPTION in a $25.00 stock is this ...

$10,000 / $25 = 400 shares.

1 option contract is equivalent to 100 shares.

So a "full position" based on $10,000 = full, is then 4 contracts.

You've "read" where proper usage of options is to MITIGATE risk?

You're NOT doing it by putting $10,000 worth of cash into one option position.

Options are a LEVERAGED instrument. You didn't have to buy 50 AAPL July $115 Calls on 06/13/07 and get emotional, selling them for a $0.10 profit. One would have removed that risk, and emotion and allowed the bias to work.

So far, I'm glad I didn't profile 50 of the XBA-GG.

I rarely utilize a STOP with an option trade unless the PRICE of the option itself might be large for traders with a $2,000 or $3,000 account.

Jeff Bailey : 7/11/2007 2:55:18 PM

SEC APPROVES ANTI-FRAUD RULE

DJ- Agency adopts an expansive new anti-fraud rule aimed at money managers who mislead or defraud investors, including those in hedge funds. Chairman Cox calls measure "an important tool to help police this market."

Jeff Bailey : 7/11/2007 2:53:26 PM

NASDAQ-100 Heat Map Link ... looks about 70:30

Jeff Bailey : 7/11/2007 2:52:15 PM

INDU breadth ... 20:10

Jeff Bailey : 7/11/2007 2:51:00 PM

Certainly off from 11:00 and 01:00 readings.

Jeff Bailey : 7/11/2007 2:50:16 PM

NASDAQ a/d 1,461/1,556

Jeff Bailey : 7/11/2007 2:50:02 PM

NYSE a/d 1,616/1,633

Keene Little : 7/11/2007 2:48:25 PM

Market internals look on the weak side with negative ticks overpowering positive ticks. But a-d numbers and new highs vs. new lows shows a very neutral day. There are no reliable setups that I currently see. Flat is a good (but boring) position.

Jeff Bailey : 7/11/2007 2:49:00 PM

As noted over the years. I tend to QUESTION things. Some say they're bearish, when they may actually be bullish, trying to talk things in. Some say they're bullish, when they're looking for the upticks.

Some really have no idea and say anything just to say something.

The charts will tell the true story.

10-WK and 30-WK bullish % a great way to envision over 3,000 stocks and where their PRICE is relative to respective 50-day and 150-day SMA.

Jeff Bailey : 7/11/2007 2:48:55 PM

NYSE 30-week Bullish % at this Link

Jeff Bailey : 7/11/2007 2:48:51 PM

NYSE 10-week Bullish % at this Link

Jeff Bailey : 7/11/2007 2:48:43 PM

Based on some of the recent blogs here in the MM, I'm a bit surprised its only 49.4%. I got the impression it was more like 90%.

Jeff Bailey : 7/11/2007 2:48:29 PM

Investor's Intelligence Poll: Bullish Sentiment Higher

DJ- Bullish sentiment rose among financial advisers surveyed in the weekly Investors' Intelligence poll from last Friday.

The percentage of financial advisers who are bullish on the market rose to 49.5% from 49.4%, while bearish sentiment rose to 21.3% from 18.0%.

The percentage of financial advisers expecting a market correction fell to 29.2% from 32.6%.

In the week ended Tuesday, 48.15% of stocks listed on the New York Stock Exchange were above their 10-week moving averages.

Also, 58.00% of NYSE stocks were above their 30-week averages.

Jeff Bailey : 7/11/2007 2:29:43 PM

SLM #27 Weighting in XLF

Jeff Bailey : 7/11/2007 2:27:05 PM

Sallie Mae (SLM) $52.08 -9.80% ... released for trade. Fast market here.

Jeff Bailey : 7/11/2007 2:25:53 PM

DJ- SLM Credit Protection Cost Also Falls Sharply

Jeff Bailey : 7/11/2007 2:18:24 PM

Stopped +10 on NQ long. Not a bank in the bunch.

Jeff Bailey : 7/11/2007 2:17:26 PM

Good gravy ... look at the number of halts so far today. Link

Jeff Bailey : 7/11/2007 2:13:29 PM

XLF $35.74 -0.05% ...

Jeff Bailey : 7/11/2007 2:13:07 PM

JPM $48.20 +1.47% ... holding gains.

Jane Fox : 7/11/2007 2:12:40 PM

Interestingly that little selloff did not get us oversold.

Jeff Bailey : 7/11/2007 2:12:22 PM

BAC $48.40 +0.08% ... reversing gains.

Jeff Bailey : 7/11/2007 2:11:32 PM

SLM: Group Believes Current Legal Proposals Could Hurt Merger

DJ- Sallie Mae, formally known as SLM Corp. (SLM), said Wednesday the group that has agreed to acquire the company said it believes that legislative proposals pending before Congress "could result in a failure of the conditions to the closing of the merger to be satisfied." Sallie Mae said it strongly disagrees with the assertion, and plans to proceed towards the closing of the merger transaction as rapidly as possible. In April, the student-loan firm agreed to be taken private by a group comprised of private-equity firms J.C. Flowers & Co. and Friedman Fleischer & Lowe LLC, as well as J.P. Morgan and Bank of America, for $60 a share, or about $25 billion.

Jeff Bailey : 7/11/2007 2:10:20 PM

SLM Corp. (SLM) Alert!$49.50 -14.35% ... halted for trade.

Keene Little : 7/11/2007 2:09:15 PM

The sharp turn back down just negated the larger 3-wave bounce I thought we might get. Basically we have a market that can't make up its mind here.

Jeff Bailey : 7/11/2007 2:08:40 PM

CHINA FOREX RESERVES CONTINUE TO SOAR

DJ- China adds $130.59 billion to its stash of official foreign-exchange reserves in 2Q, but the unusual multibillion-dollar transactions thought to have boosted those holdings show signs of tapering off.

Jeff Bailey : 7/11/2007 2:07:21 PM

DERIVATIVE INDEXES SEE SUBPRIME FALLOUT

DJ- Closely watched credit-derivatives indexes widen sharply as volatility shakes up the market following a wave of mortgage-bond downgrades yesterday. Risk premium on the closely-watched CDX index shoots higher.

See also today's tidbit (12:50:53)

Jane Fox : 7/11/2007 2:01:02 PM

My goodness we got out of that long just in time.

Jeff Bailey : 7/11/2007 1:59:58 PM

Gilead Sciences (GILD) $39.60 -0.65% Link ...

Jeff Bailey : 7/11/2007 1:58:27 PM

Research in Motion (RIMM) $210.62 +0.65% Link ...

Jeff Bailey : 7/11/2007 1:57:05 PM

Comcast (CMCSA) $27.60 (unch) Link ...

Jeff Bailey : 7/11/2007 1:55:54 PM

Oracle (ORCL) $19.94 +1.11% Link ...

Jeff Bailey : 7/11/2007 1:54:06 PM

Intel (INTC) $24.59 -1.52% Link ...

Jeff Bailey : 7/11/2007 1:52:06 PM

Cisco Systems (CSCO) $28.65 +1.20% Link ...

Jeff Bailey : 7/11/2007 1:51:11 PM

GOOG $543.69 +0.06% Link ...

Jeff Bailey : 7/11/2007 1:50:07 PM

QCOM $43.38 +0.39% Link ...

Jane Fox : 7/11/2007 1:49:29 PM

Looks like I need to try for 11 or 12 ticks instead of 13 by that is hard to do in a forum like this.

Jeff Bailey : 7/11/2007 1:49:08 PM

MSFT $29.62 +0.98% Link ...

Jane Fox : 7/11/2007 1:47:26 PM

Or you could just raise your stop and try for the extra tick.

Jeff Bailey : 7/11/2007 1:47:35 PM

AAPL $132.97 +0.49% Link ...

Jane Fox : 7/11/2007 1:46:41 PM

Ok I would be taking profits here.

Jeff Bailey : 7/11/2007 1:45:06 PM

Raising a stop on NQ long from 1,986 just under DAILY Pivot congestion support at 1,996.

Jane Fox : 7/11/2007 1:43:38 PM

Ok changed my mine (I can do that because I am a woman) and I would raise the stop to 844.80. May be sorry but time will tell.

Jane Fox : 7/11/2007 1:42:27 PM

The way I would trade it is if ER breaks 846.10 I would raise the stop to b/e but leave it for now.

Jane Fox : 7/11/2007 1:41:26 PM

Since we have already had 2 profitable trades you may want to take your profits a little early and say that is it for the day. Or just raise your stop to b/e to ensure you do not take a loss.

Jane Fox : 7/11/2007 1:39:41 PM

If you took the long from 845.20 you would want to raise your stop to 844.40 once the trade reaches 846.00.

Keene Little : 7/11/2007 1:38:47 PM

The little sideways consolidation the past two hours looks bullish. Another leg up today to give us a larger 3-wave bounce would target DOW 13638 for two equal legs up. Right now the DOW is playing around the 38% and 50% retracements of the decline from Monday. A 62% retracement would take the DOW up to 13596. Link

Jane Fox : 7/11/2007 1:33:05 PM

TRIN is also a bullish 0.73.

Jane Fox : 7/11/2007 1:32:51 PM

AD volume to new daily highs and VIX to new daily lows. Bullish

Jane Fox : 7/11/2007 1:31:36 PM

Also the low at 843.40 at 1:25 was a higher low.

Jane Fox : 7/11/2007 1:31:09 PM

I like the long at 845.20 because it will not be a counter trend trade (those are hard for me), the internals agree and we got oversold on the last little downdraft.

Jeff Bailey : 7/11/2007 1:28:24 PM

Russell 2000 Index (RUT.X) Link ... 1-box from relative strength sell signal.

Way, way, way too early to be aggressive short.

Jane Fox : 7/11/2007 1:28:59 PM

I see a long ER at 845.20 but please remember the time of day. Volume should start to pick up but it has not yet. If you decide to take the trade the stop will be 843.30 and you know where to put the target. WE have had 2 profitable trades already today and asking for a 3rd is usually asking for trouble. alert

Keene Little : 7/11/2007 1:26:48 PM

AAPL, the #1 ranking in the NDX now, could have a big influence over the tech index from here. Looking at its rally pattern from May shows a very nice 5-wave move. After a triangle 4th wave, which is always a good indicator that the next leg up will be the last, the 5th wave hit equality with the 1st wave at 133.13. It doesn't mean AAPL will turn back down from here but that's certainly a good possibility based on its wave pattern and Fibs. And if AAPL turns down it could be a drag on NDX. Link

Jeff Bailey : 7/11/2007 1:19:31 PM

Small Businesses Adamantly Oppose AB 8

DJ- Small business owners joined together with Assembly Republican Leader Mike Villines and Senate Republican Leader Dick Ackerman to oppose Assembly Bill 8, the open-ended payroll tax which will have a devastating impact on working Californians and their families.

"I have a business with over 150 employees in California. With a payroll of $1.5 million per month, a 7.5% payroll tax will cost me $1.35 million a year," said James Duran, CEO, Duran Human Capital Partners Inc. and a representative of the California Hispanic Chamber of Commerce. "This legislation will result in lost jobs, will seriously impact my company's finances and will add to already high costs of doing business in California."

For small businesses that want to provide benefits but that cannot afford to under the existing system, this proposal will make the situation worse. The bill will result in business failures, job loss and lower compensation. California needs a plan that truly controls the skyrocketing costs of health care and makes coverage affordable for small businesses and their employees.

"The NFIB Research Foundation released a report yesterday showing that AB will cause California to lose a total of 249,000 jobs -- largely small business, entry-level jobs in retail trade and food services -- within five years of enactment," said John Kabateck, Executive Director, National Federation of Independent Business -- CA. "In addition to the enormous job loss caused by a 7.5% payroll tax, AB gives an unelected state board the ability to raise this new payroll tax as health care costs rise. That is like asking small businesses to write a blank check to the state."

"I currently employ 150 people in the three restaurants I run in Fresno," said Lorraine Salazar, co-owner of Sal's Mexican Restaurants. "The average independent small restaurant employs a large workforce and earns less than 5 cents on dollar. AB 8 will require the greatest sacrifice from the businesses that are least able to pay and from employees who are the most vulnerable."

With health care premiums rising at twice the rate of payroll, AB 8 will create a huge, underfunded bureaucracy. The payroll tax will continue to rise and programs like education and transportation will be cut in order to maintain the state's health plan. AB 8 is a dangerous experiment that will result in a lower quality of care for those currently covered and unaffordable care for those currently without insurance.

Jeff Bailey : 7/11/2007 1:14:42 PM

It's probably a very good thing Tom and Watson weren't here yesterday morning.

;)

Jeff Bailey : 7/11/2007 1:13:32 PM

Dorsey/Wright Technical Leader Portfolio (NYSE:PDP) $26.83 +0.63% ...

Jeff Bailey : 7/11/2007 1:10:50 PM

Exxon/Mobil (XOM) $86.77 +0.31% ... #4 weighted in the INDU/DIA. Link

Jeff Bailey : 7/11/2007 12:58:32 PM

Today's Broker Reiterations at this Link

Jeff Bailey : 7/11/2007 12:54:10 PM

Flanders (FLDR) $7.55 -5.26% ... Fully insured for damage, profit loss. Immediately shifting production to other plants.

Jeff Bailey : 7/11/2007 12:52:46 PM

Flanders Corp. (FLDR) $7.74 -2.88% ... Bartow, Fla facility destroyed by fire.

Jeff Bailey : 7/11/2007 12:50:53 PM

Quebecor Media Pulls $750M High Yield Bond Deal ... still seeing a few of these, but with only two eyes, tough to say just how many.

DJ- Quebecor Media Inc.'s $750 million bond offer was postponed Wednesday due to market conditions, an investor said.

The junk bond market continues to be weak Wednesday as risk aversion stemming from the subprime mortgage market spread across asset classes.

The postponement of Quebecor's deal follows the delay of other deals - like ServiceMaster Co.'s (SVM) proposed $1.15 billion bond sale - due to market conditions.

Representatives from Quebecor Media Inc., which owns operating companies in numerous media-related businesses, weren't immediately available to comment.

Investors said bond buyers will likely be less amenable to risky deals because of recent volatility.

"Issuers will have to be more hospitable to negotiating covenants," Wes Sparks, senior vice president at Schroders Investment Management, said. "Investors now have pricing power because we can be a lot more discerning than we had been for the nine months leading up to this."

Some even think the pace of issuance may slow.

"Given the weak performance of the ones that actually did come to market, new deals will be slower to come and maybe we won't see much of a calendar for a while," Brian Hessel, managing at Stonegate Capital Management, said.

Quebecor Media, a unit of Montreal's Quebecor Inc. (QBR.A.T), was scheduled to sell the senior notes split between eight- and 11-year maturities rated in the single-B category via Citigroup and Banc of America.

Quebecor said earlier in the week it intended to use the net proceeds of this issuance of senior notes to fund its previously announced offer to acquire Osprey Media Income Fund. The proceeds would also be used for the proposed acquisition of all the common shares of Nurun Inc. (NUR.T) not currently held by Quebecor Media, a payment to the Carlyle Group in respect to an existing obligation, and general corporate purposes, the company said.

Keene Little : 7/11/2007 12:44:18 PM

The note on the first weekly chart says two equal legs up from March 2003 but should say October 2002. I'll be correcting that for tonight's charts.

Jeff Bailey : 7/11/2007 12:41:43 PM

Here's that 06/21/07 XLF options montage (see MM 6/21/07 @ 11:33:22 AM EDT) Link

Keene Little : 7/11/2007 12:41:10 PM

I'm working on charts for tonight's Market Wrap and thought I'd share some thoughts while the market is a little slow here. It's looking like we could chop sideways for a while longer. Either that or the bounce has topped and we'll continue lower from here.

I've been trying to figure out what the pattern has been on the DOW from the October 2002 low, which will give some clues as to what happens from right here. The first chart here says the rally from that October low has been only a cyclical bull market within a secular bear market (meaning the previous secular bull market ended in 2000). The bearish wave count on this calls the rally a large A-B-C "bounce" with two equal legs up at 13712.60 (the DOW's high on June 1st was 13692): Link

The bullish view says the 2000 high was only the top of the 3rd wave within the secular bull market that started in 1982. The 2000-2002 decline would be the 4th wave correction and the rally since October 2002 has been the 5th wave: Link This bullish count is looking for one more push up to just above 14K to tag the top of a parallel up-channel for the 2002-2007 rally.

The significance here is that either pattern calls for a new bear market leg down to start. How steep the decline will be is somewhat dependent on which wave count is correct. But both counts call for the DOW to drop back down to the October 2002 lows, probably within the next two years.

The two weekly chart view brings me to the daily chart I've been showing and why I've been showing the bullish and bearish wave counts: Link The bearish wave count (dark red) calls the top on June 1st and we've seen two sets of 1st and 2nd waves to the downside since that high. That wave count calls for a very steep sell off to start from here.

The bullish wave count (green) is a little speculative at the moment but based on the pattern of the rally from June 27th I'm thinking we'll get a choppy rise higher in an ascending wedge. The 14052 projection is based on wave relationships within the rally from March and matches the top of the longer term up-channel. I show the key levels for each count to let us know which one gets triggered. Until then it's anyone's game from here.

Jeff Bailey : 7/11/2007 12:38:50 PM

Was monitoring a COVERED put this morning with the July $35 XLF-SI.

Tough to judge actual execution for the MM if we sit on offer at $0.25.

Some may get filled, but not all.

I need to assure we all get an execution at my profiles.

Jeff Bailey : 7/11/2007 12:35:27 PM

Financial Select SPDRs (XLF) $35.86 +0.27% ... reversing morning losses from 38.2% retracement ($35.53) of 6/14/07 to 06/01/07 Close. Unusually active and #5 most active issue among all securities traded at NYSE, NASDAQ and AMEX.

Jeff Bailey : 7/11/2007 12:30:54 PM

eBay (EBAY) $33.42 +1.54% Link ... #11-weighted NDX/QQQQ continues to impress of late. Some encouraging news today regarding Skype. Nokia saying it will bundle with Smartphone.

Jane Fox : 7/11/2007 12:30:41 PM

Can you give the jthma explanation again, or reference it for me. I don't have that indicator on Quotetracker. Can I get it somehwere else on line?

I downloaded the indicator from the Tradestation Forum so you would not have it on Quotetraker but I certainly will send you the code so you could maybe have it programmed? Not sure if you can do that or not in Quotetraker but it was a thought.

Anyway here is how I use it. If the weekly jtHMA is green I want to buy a dip. The way I define a dip is I wait for the daily jtHMA to turn red, which of course the 120 and 60 minute would have to do first. Then once the 120 and 60 turn back green I use that as a buy signal.

I will put a long order just above the first 120 minute bar that turns green as long as the 60 is still green and will close it once the 120 minute turns back red.

If the weekly jtHMA is red I want to sell a rally. The way I define a rally is I wait for the daily jtHMA to turn green, which of course the 120 and 60 minute would have to do first. Then once the 120 and 60 turn back red I use that as a sell signal.

I will put a short order just below the first 120 minute bar that turns red as long as the 60 is still red and will close it once the 120 minute turns back green.

I do not require the monthly and weekly to both be the same color because I found that is not needed with these short swing trades. I do however use the monthly and weekly for trading my 401(k) and IRAs because there is so much less activity.

Jeff Bailey : 7/11/2007 12:17:47 PM

CME $571.70 +1.94% ...

Jane Fox : 7/11/2007 12:16:22 PM

VIX is hovering around daily lows so is telling me ES will break to new daily highs soon. Link

Jeff Bailey : 7/11/2007 12:15:48 PM

Intercontinental Exchange (ICE) alert! $163.82 +5.19% Link ... No dividend here, so StockCharts' PnF chart will do fine. Stock challenges all-time high close from 2/21/07.

Just as we used CEO for conviction in PTR, here too we draw on ICE and CME relationship.

Jeff Bailey : 7/11/2007 12:10:33 PM

Valero Energy (VLO) ... technical update at this Link ... Shares remain strong and yesterday's trade at $78 triggered a spread tiple top buy signal. I've tied the Crack Spread (see 11:53:18) benchmarks with the stock. It is debatable just what sector bullish % you'd place VLO into, but we won't argue with the institutionally followed Dorsey/Wright. With sector "bear alert" and we can not begin to draw on the Purdue University study of chart pattern probababilites.

Jane Fox : 7/11/2007 12:03:03 PM

I would not be short here. Link

Jeff Bailey : 7/11/2007 11:57:48 AM

Unleaded/Crude Oil Crack Spread ... 20-day Net Changes are squared up for Light Sweet/New York Harbor.

Here's the chart of $GASO/$WTIC and it looks like 30.60 measure becomes a pivot point as traders look past the summer driving season. Link

Source: www.stockcharts.com (Free PnF Charts!)

Jeff Bailey : 7/11/2007 11:40:03 AM

Snugging a stop on NQ long from 1,986 just under consolidation support at WEEKLY Pivot.

Jane Fox : 7/11/2007 11:30:17 AM

Here is the jtHMA spreadsheet I promised earlier. Link

Jane Fox : 7/11/2007 11:25:57 AM

Ah there we go target hit at 846.00.

Jane Fox : 7/11/2007 11:25:40 AM

Stop to 844.40. 3 ticks as risk.

Jane Fox : 7/11/2007 11:25:17 AM

How do they do that!!! Within 2 ticks of profit - again.

Jeff Bailey : 7/11/2007 11:24:45 AM

Johnson & Johnson (JNJ) $62.53 +0.69% ...

Jane Fox : 7/11/2007 11:24:22 AM

Stop to 843.40

Jeff Bailey : 7/11/2007 11:24:19 AM

Boeing (BA) $100.08 -0.16% ...

Keene Little : 7/11/2007 11:24:13 AM

Nice bounce off this morning's early low. Now watch to see if this will develop into something more than just a corrective 3-wave bounce. Two equal legs up is at SPX 1519.57 and DOW 13588. A failure at those levels could lead to another pullback or drop to new lows.

Jane Fox : 7/11/2007 11:24:09 AM

ER tagging daily highs at 845.00, need to break it to raise the stop on the long from 844.70. So I guess my comment about where to put the stop no matter where you enter was incorrect.

Jeff Bailey : 7/11/2007 11:23:17 AM

While I've got Journey's "Don't Stop Believ'n" in the que, might be a good album to start listening to at 13,700? Link

INDU 13,563 +0.45% ...

Jane Fox : 7/11/2007 11:22:40 AM

... of course so is mine.

Jane Fox : 7/11/2007 11:22:11 AM

Yup one of the best albums ever. Your age is showing Jeff :)

Jeff Bailey : 7/11/2007 11:20:42 AM

Bat Out of Hell? ... Good trading music Jane.

Jane Fox : 7/11/2007 11:17:29 AM

Now how many of you are asking, "Who is Meatloaf"?

Jane Fox : 7/11/2007 11:16:13 AM

Well the markets did revisit their overnight lows and then the bulls did come back into the market just not as strong as I thought they would. Oh well "2 out of 3 ain't bad" - as Meatloaf would say. Link

Jane Fox : 7/11/2007 11:14:08 AM

Once we get past the daily highs at 845.10 I will put my stop at 843.40.

Jane Fox : 7/11/2007 11:12:33 AM

BOSTON (MarketWatch) -- For home-builder stocks, the bad news just keeps piling up.

Two of the largest residential builders this week warned that they expected to post quarterly losses driven mainly by impairment charges.

Additionally, a pair of widely followed ratings agencies said they planned to downgrade billions of dollars worth of mortgage-backed bonds threatened by the subprime mess. Late Tuesday, Ryland Group Inc. (RYL) became the latest builder to caution it anticipated suffering a loss on the back of inventory impairments and write-offs. For the quarter ended June 30, Ryland expects to book charges between $145 million and $155 million, representing 6% of book value on an after-tax basis, according to Banc of America Securities.

Earlier Tuesday, another large sector bellwether, D.R. Horton Inc. (DHI) , also warned that an order drop of 40% and charges would lead to red ink in the latest quarter.

Jeff Bailey : 7/11/2007 11:11:44 AM

Chicago Merc. (CME) ... technical update at this Link ... after surging as high as $582.05 on Monday in anticipation that it would win approval from CBOT's board, shares of CME pulled back to our initial bull entry point. This morning's dip to $554.66 finds demand holding firm with a potential 3-box reversal back higher. We can't chart that reversal today as the CME was in a column of O. However, sometimes the market gives participants a second chance. It looks like buyers were ready at WEEKLY Pivot/MONTHLY R1.

Jane Fox : 7/11/2007 11:11:09 AM

Internals are bullish. Link

Jane Fox : 7/11/2007 11:09:46 AM

Of course the target is 844.70 + 1.30 = 846.00

Jane Fox : 7/11/2007 11:09:25 AM

Long from 844.70 stop is 842.80

Jane Fox : 7/11/2007 11:07:47 AM

STop will be 842.80 no matter which entry you take.

Jane Fox : 7/11/2007 11:07:05 AM

Long ER at 844.70 but beware that daily highs are at 845.10. If you like you can put a long at 845.20 alert

Jeff Bailey : 7/11/2007 10:53:14 AM

On the demand side, gross inputs into the nation's refineries rose for a third-straight week, confirming the recent rise in the underlying commodity. Gross inputs for the week ended July 6th rose by 25,000 barrels/day to 15.7 million barrels/day.

Oil inputs alone also rose for a third-straight week, rising by 17,000 barrels/day to 15.56 million barrels/day.

The increases in refinery inputs relative to crude oil supplies has the number of days of crude oil supply slipping to 22.9 from last week's 23.1 days of supply.

Jeff Bailey : 7/11/2007 10:43:32 AM

As refiners turned to unleaded, ultra low sulfer diesel refining tapered off last week. Stockpiles of 0-15 PPM Sulfer fell by 449,000 barrels to 66.9 million barrels.

Keene Little : 7/11/2007 10:41:50 AM

Depending on which index I'm looking at I see resistance or support at this morning's price action. It might mean we're going to chop sideways a bit until the next direction gets going. Because SPX is struggling beneath its broken uptrend line, and the others haven't tested their equivalent support levels yet, I'm leaning towards further downside. If we chop sideways for the rest of the morning then that outcome becomes a higher probability.

Jeff Bailey : 7/11/2007 10:41:00 AM

Reformulated gasoline stockpiles also rose for a second-straight week recording their largest gain weekly gain since the week ended May 4th. Stockpiles rose by 365,000 barrels.

Jeff Bailey : 7/11/2007 10:38:49 AM

Total gasoline inventories saw their second consecutive weekly build. Rising by 1.14 million barrels.

Jeff Bailey : 7/11/2007 10:37:37 AM

Weekly crude oil inventories fell by 1.4 million barrels to 352.6 million.

Jane Fox : 7/11/2007 10:22:10 AM

Looks like the NAZ has found its support today. Link

Jane Fox : 7/11/2007 10:14:56 AM

There we go. Target at 842.50

Jane Fox : 7/11/2007 10:14:15 AM

Ok now stop to 840.80. Another touch of 842.30 and I am now not willing to risk anymore. alert

Jane Fox : 7/11/2007 10:12:59 AM

Don't want to put the stop to 840.80 'cause I don't want to get stopped out in the noise.

Jane Fox : 7/11/2007 10:11:12 AM

Made a high of 842.30 within 2 ticks of profit.

Jane Fox : 7/11/2007 10:10:51 AM

Stop to 840.40 alert

Jane Fox : 7/11/2007 10:10:28 AM

Once we get to 842 I will put the stop to 839.80

Keene Little : 7/11/2007 10:06:06 AM

Bulls stepping back in here and might get the save after all. Now watch to see if SPX finds its broken uptrend line from June 27th, currently just under 1513, to be resistance.

Jane Fox : 7/11/2007 10:05:19 AM

Target of course is 841.20 + 1.30 = 842.50

Jane Fox : 7/11/2007 10:05:02 AM

Long at 841.20 stop is now at 839.40.

Jane Fox : 7/11/2007 10:03:30 AM

If triggered long at 841.20 we will put a stop at 839.40

Jane Fox : 7/11/2007 10:02:11 AM

Let's lower that long to 841.20 alert

Jane Fox : 7/11/2007 9:58:38 AM

Let's try an ER long at 842.20 alert

Jane Fox : 7/11/2007 9:57:20 AM

WE are oversold now and I think the bulls will be showing up at any time now.

Keene Little : 7/11/2007 9:56:26 AM

The next support for SPX is its uptrend line from March, currently near 1499.

Keene Little : 7/11/2007 9:55:49 AM

You should be short now. Watch NDX 1960 and DOW 13420 for potential support next.

Jane Fox : 7/11/2007 9:50:57 AM

My roadmap this morning was a revisit to overnight lows then the bulls would return. Link

Jane Fox : 7/11/2007 9:46:28 AM

BOSTON (MarketWatch) -- The Securities and Exchange Commission has launched an informal probe into Dendreon Corp.'s handling of its prostate cancer drug Provenge, which recently failed to win approval from the Food and Drug Administration.

In a filing made Tuesday, Dendreon (DNDN) said it was notified on July 9 that the SEC is probing clinical trials for Provenge, its market application for the drug and the FDA's subsequent review of that application.

Jane Fox : 7/11/2007 9:44:30 AM

I will update the jtHMA SS later to show you how the markets are setting up for a "buy the dip."

Keene Little : 7/11/2007 9:43:32 AM

SPX has bounced slightly from yesterday's close and as long as it holds above 1510 I'd give the bulls a chance at a save here. But if they drop the ball here then get short. Then keep an eye on the potential support levels I mentioned for the others at their uptrend lines (given in last night's posts, below).

Jane Fox : 7/11/2007 9:40:59 AM

CHICAGO (MarketWatch) -- The volume of mortgage loan applications increased slightly last week even as mortgage interest rates rose, the Mortgage Bankers Association reported Wednesday.

Total application volume was up a seasonally adjusted 1.1%, according to the group's weekly survey. Results were adjusted to account for the Independence Day holiday.

Purchase loans drove the modest rise, with the volume of applications increasing a seasonally adjusted 3.8%. The volume of loans to refinance decreased 3.0%.

Jane Fox : 7/11/2007 9:39:11 AM

TRIN is a also neutral at 1.09

Jane Fox : 7/11/2007 9:38:44 AM

I thought the AD line would be bearish right off then turn around but it is neutral at +249.

Jane Fox : 7/11/2007 9:32:17 AM

Crude has certainly hit resistance and I am still waiting for a long entry.

Jane Fox : 7/11/2007 9:22:35 AM

NEW YORK (MarketWatch) -- Crude-oil futures edged lower Wednesday, as traders awaited data on U.S. petroleum supplies that are expected to show a rise in crude inventories for a sixth week in a row.

Crude for August delivery fell 24 cents at $72.57 a barrel in electronic trading.

The U.S. Energy Department will release data on oil supplies at 10:30 a.m. Eastern time.

"Last week's numbers were rather bearish, but only managed to act as a temporary speed bump, as the price advance resumed the very next day," said Edward Meir, analyst at Man Financial, in a research report. Link

Jane Fox : 7/11/2007 9:20:12 AM

NEW YORK (MarketWatch) -- The dollar came under further selling pressure Wednesday, with sterling reaching its highest level since 1981 and the yen continuing to strengthen because of concerns about the U.S. subprime mortgage market and potential economic weakness.

The dollar has a "downside bias against most of the major currencies, as the capital markets reel from heightened subprime woes," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

"It is unclear still at this juncture the full ramifications of what seems like an evolving situation," but "one implication that the market has drawn from this is that the Federal Reserve is more likely to cut interest rates," he wrote in a note to clients. Link

Jane Fox : 7/11/2007 9:13:23 AM

The Russell 2000 is in a trading range but I keep seeing these bearish formations. Last week it was a bearish H&S and now I see a "W" formation, another bearish formation. But once again, like the H&S, it needs to break the support 820 to confirm and since the H&S didn't play out I don't suspect the "W" will either. Just like to keep that wall of worry out there. Link

Jane Fox : 7/11/2007 9:10:47 AM

We had a very much needed selloff yesterday and closed near daily lows so it was no big deal that the marekts all broke their previous day lows overnight.

I suspect we will open bearish, maybe tag overnight lows and then the bulls will return. Link

Keene Little : 7/11/2007 8:52:10 AM

After rallying to a high about 6:00 AM equity futures took a nosedive into a 7:30 AM low, with ES shedding 10 points in the process. They've since climbed sharply back up but it makes you wonder if the premarket morning rally is being manipulated to get a relatively flat open which will then be followed by more selling again.

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