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Keene Little : 7/12/2007 10:51:48 PM

All the indices look like they could press a little higher before pulling back into next week. They might consolidate a little on Friday and give us a minor new high but basically the big move should be over. Next we should see a pullback (possibly a choppy consolidation through most of next week) and then a final rally leg that should take us into the end of the month.

There's a possibility that we'll get a larger pullback and final rally into the end of next week but so far the price patterns look on track for a final high at the end of this month/beginning of next. Daily chart updates showing the bullish counts that were confirmed with Thursday's rally:
DOW: Link
SPX: Link
NDX: Link
RUT: Link Note that the RUT is lagging and showing more bearish divergence than the others. This is a sign of money moving stronger into the large caps.

There were some odd indications of a lack of institutional involvement in Thursday's rally. The neutral TICK readings and the lowest NYSE program trading volume since 2001 says the buying wasn't coming from the big institutions. The cumulative advance/decline line has not made a new high with price so we have a negative divergence there. New highs and new lows both increased. Why new lows when the market gapped up and never looked back? It seems money is running into the safety of the big caps as though they're preparing for something. That's the big negative I see after Thursday's rally.

And after all the excitement of the rally the big stocks I've been watching, GOOG and AAPL, sat there like bumps on a log--GOOG: Link and AAPL: Link They both have rally patterns that can count complete, or near complete, with bearish divergences. Keep an eye on the big guns (MSFT is already off its May highs).

Bottom line is that something doesn't smell right about this rally and there's the possibility we're witnessing the final stages of a blow-off top. But that's just speculation. Until prices start breaking the key levels I've got on the charts, continue to run with the bulls. Just be careful about some choppy consolidation over the next few days.

Jeff Bailey : 7/12/2007 10:06:27 PM

CME's Daily Pivot Levels for Friday are ... $575.43, $581.61, Piv= $586.09, $592.27, $596.75

Jeff Bailey : 7/12/2007 10:01:12 PM

I'm getting them ... hold on! ... :)

OI Technical Staff : 7/12/2007 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The Market Monitor has been archived.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 : 7/12/2007 9:59:28 PM

QQQQ Daily Pivot Levels for Friday ... $48.63, $49.10, Piv= $49.38, $49.85, $50.13.

Jeff Bailey : 7/12/2007 9:55:52 PM

Where's that option calculator!!!???

See today's 01:23:46, 02:39:05, 02:50:39 and 02:56:22

Jeff Bailey : 7/12/2007 9:51:01 PM

Question now is ... does CME have Weekly R2 in it tomorrow?

Jeff Bailey : 7/12/2007 9:48:47 PM

Good gravy ... yesterday I asked (when looking at CME chart) was "anything else trade it MONTHLY R2 that's testing its MONTHLY R1?"

The ONLY thing the CME and QQQQ have/had in common were their MONTHLY R1 and R2 as well as WEEKLY Pivot and R1.

Jeff Bailey : 7/12/2007 9:40:04 PM

Now ... after YOU have LOOKED at the VXN ... then look at the QQQQ with my MONTHLY (pink) and WEEKLY (blue) pivot retracement Link

Jeff Bailey : 7/12/2007 9:15:12 PM

Educational/Review

VXN.X 60-minute interval chart with QCharts' Weekly pivot levels, and my MONTHLY Pivot Level retracement (pink) Link

Volatility measures like the VIX/VXO and the above VXN are difficult for many to grasp.

What makes them move UP is when call SELLERS and put BUYERS outnumber call BUYERS and put SELLERS. That's it!

What maked them move DOWN is when call BUYERS and put SELLERS outnumber call SELLERS and put BUYERS. That's it!

Where I see some "get in trouble" is when they think "heavy call open interest" is equivalent to "market too bullish!" Also ... "heavy put open interest" being equivalent to "market is too bearish."

You see, NAKED CALL SELLING is actually much more bearish than put buying. Why? BECAUSE RISK IS UNLIMITED!

Yet institutional traders will SELL NAKED CALLS, and they love to do it when volatility is high. Another reason they SELL NAKED to begin with is that it is THEIR JOB! The CBOE's QQQQ option market maker (or ISEX, PHLX, NYSE, BOSX, AMEX) is providing LIQUDITY to buyers.

However, most institutions can AFFORD to buy mass amounts of QQQQ, or NQ to hedge NAKED calls (or NAKED PUTS after they've sold to open). Right? When you/I buy a CALL, we're "buying to open" the contract. When we do that, the MM is actually "selling to open."

Now take an additional step and become a QQQQ or an NQ market maker.

Now "pretend" the QQQQ/NQ is at/near a multi-year high, and overhead supply of stock (that might be sellers) is very little.

Now start "shorting to the market" as buyers scramble at your offer in an attempt to try to hedge out-the-money NDX NAKED CALLS; or even worse ... IN-the money NDX NAKED CALLS!

What do you get?

A day like yesterday (see VXN above) and again today.

That's why I alerted traders to "watch the VXN" and looked at BOTH the QQQQ and the NDX July Option Montages Monday evening. Not just the QQQQ's.

I MADE THAT MISTAKE with the SPX/SPY years ago (looked at just the SPY)! Got my head handed to me.

If you think this is "hindsight 20/20" then that's OK. But at least LOOK at the VXN.X above, and learn to RECOGNIZE it.

At times, you, I, others, will see how "nicely" the VIX/VXN/VXO trades in UNISON with the like index (SPX/NDX/OEX) and we "love the VIX.X." For several trades!

But then, one day, the "VIX isn't working" today.

It (VIX,VXN,VXO) is working like it is supposed to do, but when it "doesn't work" is usually at an "extreme." Like and R1 or R2, or an S1, or S2.

Jeff Bailey : 7/12/2007 8:03:53 PM

VXN.X 17.25 ... WEEKLY Pivot 17.02. Relative to last week's H/L/C, one could say it is still high. Yesterday morning, when it traded WEEKLY R2 (18.72) it was "very high" relative to last week's H/L/C.

VXN's MONTHLY Pivot Levels are ... 12.23, 15.05, Piv= 17.51, 20.33, 22.79

Relative to last month's H/L/C ... juuuust about "right."

Marc Eckelberry : 7/12/2007 7:45:50 PM

I put up the enevlopes on VIX and VXN, readers should check links and not look at absolutes, but relatives.

Jeff Bailey : 7/12/2007 7:47:58 PM

NDX Option Montage From Monday evening Link ... Open Inerest as of Friday 07/06/07.

NDX Option Montage Tonight Link ... Open Interest as of Wednesday night. VXN did measure as low as 16.43 today.

Interesting ... VXN little changed on comparison. But when you're short and it moves against you, well... you got to cover.

How do you hedge a NAKED call? That's right, buy the underlying QQQQ, or the NQ aggressively.

Marc Eckelberry : 7/12/2007 7:43:01 PM

The pattern has changed: now it's an up Thursday before opex. Squeezing shorts might not be where the big money is going forward. How about whacking all those equity calls? ISEE (http://www.ise.com/WebForm/viewPage.aspx?categoryId=126&header3=true&menu0=true&link1=true)closed in record equity call territory for the second time this month, a level not seen since May of last year.

Jeff Bailey : 7/12/2007 7:33:09 PM

It is interesting that QQQQ goes 100% for June when bears were aggressively shorting Tuesday morning.

Trouble Tuesday morning, is few believed it could happen in just two days!

I agree that shorts threw in some towels today.

Marc Eckelberry : 7/12/2007 7:30:38 PM

I think it's fair to say that shorts threw in the towel today.

Jeff Bailey : 7/12/2007 7:28:35 PM

CME's 60-minute interval chart ... with retracement, MONTHLY Pivot Levels, and Weekly Pivot Levels, as well as Level II option chains CWO-GD and CWO-GB. Link

While I was saying to "sell the CWO-GD", I was actually looking at the CWO-GB and thinking that $1.95 was worth the risk.

It's not necessarily that I think CME would close ABOVE $620 at next Friday's close, but what a move above $591.54 could do to an account that is long 9 shares, and NAKED $620 @ $0.95.

Potential "margin call" and I don't do margin calls. Never have, and never will.

Marc Eckelberry : 7/12/2007 7:27:08 PM

VIX: Link

Marc Eckelberry : 7/12/2007 7:30:11 PM

VXN: Link

Non-confirmation.

Marc Eckelberry : 7/12/2007 7:30:23 PM

QQQQ: Link

100% June to the penny.

Jeff Bailey : 7/12/2007 7:05:51 PM

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

I made a potentially SIGNIFICANT error today regarding the CME July $620 NAKED Call (CWO-GD) at 02:23:45 PM.

While I did have that option's Level II on my screen, I also had the Level II of the CME July $610 Call (CWO-GB) on my screen.

At my now 02:23:45 post, I had initially type "at the bid of $1.95," not $0.95 as now posted. The "$1.95" was from the July $610 Call (CWO-GB) Level II.

Since I had already issues the Alert and an official trade signal given, I had to honor it. I did see several options trade on signal.

This was MY fault for thinking $1.95, when in actuallity I/you are potentially RISKING too much (unless long 100 shares), for $95.00. Trade closed! Loss $45.00.

Jeff Bailey : 7/12/2007 5:36:13 PM

Closing U.S. Market Watch at this Link

US Dollar Index (DXY) closes at 52-week low!

Jeff Bailey : 7/12/2007 5:30:17 PM

US Posts $27.48 Billion Budget Surplus ... Earlier today ...

DJ- June's surplus is 34% higher than a year earlier. Congressional Budget Office projected a surplus of $25 billion. Spending increases 2% while revenue climbs 5%.

Jeff Bailey : 7/12/2007 5:25:33 PM

Wash Mutual (WM) $42.48 +0.56% ...

Jeff Bailey : 7/12/2007 5:24:38 PM

New Century (NEWCQ) $0.39 +11.42% ...

Jeff Bailey : 7/12/2007 5:21:50 PM

Fremont General (FMT) $10.50 -0.94% ...

Jeff Bailey : 7/12/2007 5:21:01 PM

4 ISSUERS ACCOUNT FOR BULK OF MBS DOWNGRADES

DJ- These issuers, Fremont General, Long Beach Mortgage, a unit of Washington Mutual, New Century and WMC Mortgage, account for only 31% of issuance volume but 63% of downgrade volume to date, says a Moody's analyst.

Jeff Bailey : 7/12/2007 5:01:41 PM

Pretty much a repeat of last week's remarks.

Jeff Bailey : 7/12/2007 5:01:15 PM

Fed's Yellen:

Current Fed Policy Should Lower Inflation
"Heartening" To See Lower Core Inflation
Upside Risks To Inflation Continue To Be Present
Inflation Expectations Still Well Anchored

Jeff Bailey : 7/12/2007 4:24:18 PM

9 million marked $25.45

3.4 also marked $25.45

Jeff Bailey : 7/12/2007 4:23:26 PM

Oh my ... look at thos blocks crossed in extended on Intel (INTC) $26.00 +5.85% Link from $25.45 ... X gets another square. Probably an aggressive short from Monday morning calling it quits.

Keene Little : 7/12/2007 4:18:38 PM

The final TICK reading for the day is still neutral and the NYSE a-d line never got back above its initial spike high this morning. This hasn't happened in over 5 years according to markettells.com. Just not normal. You can't argue with price but today's jam session was driven by the big cap indices. We're set up for a nice correction tomorrow and perhaps into the first day or two next week.

Jeff Bailey : 7/12/2007 4:04:01 PM

NASDAQ-100 Index (NDX) 2,021.03 +1.86% ... oh my!

Jeff Bailey : 7/12/2007 4:01:23 PM

CNBC - Dow Industrials Sees Biggest Single Day Gain in 4-years!

Jeff Bailey : 7/12/2007 4:00:22 PM

Dow Industrials (INDU) 13,856 +2.05% ... X gets another square. Like Meat Loaf's "Bat Out of Hell"

Jeff Bailey : 7/12/2007 3:58:23 PM

Wild trade in the energy complex today.

Jeff Bailey : 7/12/2007 3:56:01 PM

Oh my! ... CNBC mentioning how short market was at Monday's close.

Jeff Bailey : 7/12/2007 3:53:40 PM

Kirit! ... You can now see that some days I profile a lot of trades, other days, not much.

On active days like today, I'll update my profiles from 01:56:54 as they stand at today's close.

Jeff Bailey : 7/12/2007 3:49:04 PM

Swing trade sell covered call alert! ... Let's now sell one (1) of the eBay EBAY July $35 Calls (XBA-GG) at the bid of $0.70.

EBAY $34.19 +1.78% ...

Keene Little : 7/12/2007 3:47:06 PM

Even after the strong continuation higher this afternoon, the NYSE a-d line hasn't even made it back up to the morning high. As I said before, something fishy about this rally, and way too much, too fast. Hangover tomorrow from all the partying today. Link

Jane Fox : 7/12/2007 3:44:16 PM

Well I had a good idea we would break upwards but gee willerkers I didn't think it would happen today. Link

Jeff Bailey : 7/12/2007 3:44:04 PM

Per my 03:25:28 Alert! ... should read Naked Call/partial covered ... CWO-GD sold $0.95, but BOUGHT BACK/COVERED at $1.40.

Jeff Bailey : 7/12/2007 3:41:02 PM

NASDAQ a/d 2,173/903

Jeff Bailey : 7/12/2007 3:40:45 PM

NYSE a/d 2,360/939

Jeff Bailey : 7/12/2007 3:40:14 PM

Selling long MR from 852 entry. Fill the gap, that's enough.

Keene Little : 7/12/2007 3:36:16 PM

We're getting an overshoot of the Fib projection for NDX at 2011.33 (for equality between the 1st and 5th waves in the rally from June 26th) but basically form and price have been met for that 5-wave rally and the next move will be a correction of it. Who knows how deep the pullback will be but we should certainly be putting in the last of this leg up and I'd be looking at the short side for tomorrow. Link

Jeff Bailey : 7/12/2007 3:30:26 PM

I was largely COVERED and don't like it.

Jeff Bailey : 7/12/2007 3:29:29 PM

Don't like what I see in the CWO-GB $610's from a NAKED $620 call perspective. It isn't worth the RISK!

Jane Fox : 7/12/2007 3:28:07 PM

You should be out at 858.50.

Jeff Bailey : 7/12/2007 3:26:07 PM

CME $587 76 +1.32% ...

Jeff Bailey : 7/12/2007 3:25:28 PM

Swing trade Naked Call/partial put buy it back alert! ... Buy back the CWO-GD right now at $1.40 offer!

Jane Fox : 7/12/2007 3:21:45 PM

That would not be funny if they came and got us then turned around just like this morning!!!

Jeff Bailey : 7/12/2007 3:20:32 PM

Dow Industrials (INDU) 13,800 +1.67% ... X gets another square.

Jane Fox : 7/12/2007 3:18:27 PM

4 ticks at risk - just like this morning.

Jeff Bailey : 7/12/2007 3:18:20 PM

And then you think, say ... oh gosh, what was I thinking!

Jane Fox : 7/12/2007 3:18:03 PM

Stop to 856.80

Jane Fox : 7/12/2007 3:17:53 PM

Thar she goes.

Jane Fox : 7/12/2007 3:17:44 PM

ER is having an issue with its daily highs.

Keene Little : 7/12/2007 3:17:20 PM

Cleaning up the SPX daily chart as well, I'm showing a guess as to how price might chop its way higher to a Fib target zone around 1560 (the 1st and 5th waves in the rally from March are equal near 1558 and two equal legs up from October 2002 is near 1562) by the end of the month. Link

Jeff Bailey : 7/12/2007 3:16:46 PM

NASDAQ a/d 2,080:979

Jeff Bailey : 7/12/2007 3:16:33 PM

NYSE a/d 2,233:1,035

Jane Fox : 7/12/2007 3:14:52 PM

There is just nothing smooth and orderly about this market today.

Jane Fox : 7/12/2007 3:14:27 PM

Stop to 856.40

Jane Fox : 7/12/2007 3:12:24 PM

If anyone took the short trade I profiled this morning I would love to hear from and how you traded it. It got to within 2 ticks of profit then turned around and then back to full profit. Please email me jbfox@charter.net

Jane Fox : 7/12/2007 3:09:50 PM

Next stop move will be to 856.40 but not yet. alert

Jane Fox : 7/12/2007 3:08:45 PM

Stop stays at 855.80 this is a flaky market today.

Keene Little : 7/12/2007 3:08:11 PM

SPX has some headroom up to about 1542-1543 where it will run into the top of a parallel up-channel for price action since the June 27th low. The current leg up this afternoon looks good for completing a 5-wave up from yesterday's low. That calls for a pullback correction tomorrow so we may have a shorting opportunity setting up by the end of the day. Link

The price depiction on this chart would equate to a move that will take the SPX higher into the end of the month and have the DOW reaching above 14K.

Jeff Bailey : 7/12/2007 3:07:09 PM

Semiconductor HOLDRs (SMH) $40.07 +2.61% ... X gets the square.

Jane Fox : 7/12/2007 3:03:30 PM

Jeff the DWC all time high on June 4th was 15578 and today's high so far has been 15573 so I do not get a new high on the Wilshire 5000.

Jane Fox : 7/12/2007 3:01:47 PM

But you all knew that!

Jane Fox : 7/12/2007 3:01:36 PM

Target is 857.20 + 1.3 = 858.50

Jane Fox : 7/12/2007 3:00:15 PM

IF you decided to take this trade you are long at 857.20 with a stop at 855.80

Jeff Bailey : 7/12/2007 3:00:07 PM

Wilshire 5000 (DWC) alert! 15,571.04 +1.22% ... Challenging its 6/4/07 all-time high close.

Jane Fox : 7/12/2007 2:59:44 PM

This morning I mentioned that the markets were in a trading range and that the most tried and true formation was a consolidation at daily highs (in this case yearly highs) and they would break upward. The DOW as done just that today.

Keene Little : 7/12/2007 2:58:11 PM

I think it's pretty clear at this point that we have a lot of hedging/short covering very likely due to opex. Don't try to be a hero today and short it. Tomorrow could be a very different story (short term) but these kinds of days typically go right into the close.

Jane Fox : 7/12/2007 2:57:42 PM

I see an ER long at 857.20 but the market is choppy. Take it if you can take heat on it. alert

Jeff Bailey : 7/12/2007 2:56:22 PM

CME Options Calculator $620 Strike with "next level of BEAR risk" to our Bullish Vertical Count 61.8% retracement at this Link

Jeff Bailey : 7/12/2007 2:54:19 PM

And you continue to assume the Worst!

Keene Little : 7/12/2007 2:53:10 PM

The new high for the DOW at least gives me the opportunity to clean up the charts a little. By rallying above 13690 the DOW triggered the bullish wave count and negated the bearish one. This updated daily chart shows what could now play out into next week and possibly into the end of the month: Link

It may be hard to see but I've drawn in a small parallel up-channel for price action since the June 27th low. The DOW is currently pressing the top of this channel today. The wave count calls the June 27th low as the end of wave-4 (within the rally from March) and the start of wave-5. This wave-5 will be made up of a 5-wave count which I'm showing as wave-i, wave-ii, etc. Today's rally could be wave-iii (dark green) or we might get a pullback and another high before wave-iii completes (light green count).

It gets a little confusing but for now just concentrate on two upside targets and the wave count will become clearer as we approach those levels. The first is 13831.30 which is where the 1st and 5th waves of the rally from March will be equal (the most typical wave relationship). I show a down-up sequence to that high next week and it could mark THE high for the rally.

If the DOW pushes higher than that then we have 14052 (two equal legs up from July 2006) and then 14184 (5th wave = 162% of the 1st wave which is common in a blow-off move). Both of these higher levels coincide closely with the top of the parallel up-channel for the 2002-2007 rally: Link

Jeff Bailey : 7/12/2007 2:50:39 PM

CME Options Calculator $620 Strike with "next level of BEAR risk" to WEEKLY R2 at this Link

Jeff Bailey : 7/12/2007 2:41:39 PM

Aggressive shorts ... I've got their attention now.

Jeff Bailey : 7/12/2007 2:41:01 PM

Then you do THIS! Begin PLANNING FOR THE WORST!

Jeff Bailey : 7/12/2007 2:39:05 PM

CME Options Calculator $620 Strike at this Link

with info "Security Price," "Strike" and "Implied Volatility" (see 02:13:59)

Jeff Bailey : 7/12/2007 2:28:12 PM

VIX.X 15.34 -7.81% ...

Jeff Bailey : 7/12/2007 2:27:58 PM

And a volatility measure ...

Jeff Bailey : 7/12/2007 2:26:25 PM

ICE $168

Jeff Bailey : 7/12/2007 2:26:09 PM

You're grabbing a benchmark of a "like stock" ...

Jeff Bailey : 7/12/2007 2:23:45 PM

Swing trade sell NAKED, partial covered call alert! for the Chicago Merc. (CME) $584 +0.66% ... and one (1) of the CME July $620 Calls (CWO-GD) at the bid of $0.95.

Jane Fox : 7/12/2007 2:19:29 PM

The Russell 2000, as Keene noted, has a little bit further to go. Link

Jeff Bailey : 7/12/2007 2:20:07 PM

Then you'll look at your CME chart, with levels (retracement, M Pivots, W Pivots) in place. Your now eyeballing where is $610, $620. Observing how stock has traded against those levels. What have computers/traders been doing.

Computers are likely MONTHLY and WEEKLY Pivot levels.

Jane Fox : 7/12/2007 2:17:54 PM

Both the DOW and NAZ are making new yearly highs but the SPX is not - yet. Link

Keene Little : 7/12/2007 2:15:25 PM

It looks to me like the big caps are getting the attention today, which explains why the a-d line hasn't kept up with today's rally in the major indices. That could be construed as bearish since money may be dumping the small stuff and heading for the safety of the big caps (easier to get out of when and if the market takes a dump). The RUT is up strong as well but it hasn't made a new high above Monday's and is therefore lagging.

As strong as today is, it looks somewhat defensive in nature. It doesn't mean we're topping here but it's another piece of the puzzle that tells me the EW count calling for a high soon (soon being a week to a couple of weeks) is probably correct.

Jeff Bailey : 7/12/2007 2:15:23 PM

Maybe you've got a stock other than CME in your portfolio that isn't 100 shares, but might think about writing out-the-money call on?

Jeff Bailey : 7/12/2007 2:13:59 PM

CME Options Montage at this Link

Where's stock trading relative to near-strikes? What's high/low?

process begins ...

Jeff Bailey : 7/12/2007 2:02:06 PM

NASDAQ a/d 2,072:935

Jeff Bailey : 7/12/2007 2:01:51 PM

NYSE a/d 2,213:1,020

Jeff Bailey : 7/12/2007 2:00:55 PM

WATCHING for possible Covered Call opportunity in the XBA-GG for the underlying 100 share long in EBAY.

Remember! My profiled bull target for EBAY 6/22/07 bull entry was $36.00.

Jeff Bailey : 7/12/2007 1:56:54 PM

Current OPEN MM Profiles with today's adjustments at this Link

1) Closed out the XBA-GG from 5/09/07 entry at $0.65.
2) Raised stop on EBAY shares from 6/22/07 entry to $33.20.
3) Sold one (1) of the DAW-HE at $4.20 from 7/5/07 entry.
4) Raised stop on the other one (1) of the DAW-HE to $136.00 in the underlying DIA.

Keene Little : 7/12/2007 1:47:09 PM

No pullbacks. Looks like it's going to be one of those days where they force wannabe bulls and scared bears to chase the market ever higher. But if the internals don't improve by the end of the day we might be looking at a hangover tomorrow.

Jeff Bailey : 7/12/2007 1:41:45 PM

Bullish swing trade call raise stop alert! ... for the remaining Dow Diamonds DIA Aug $135 Call (DAW-HE) (from 07/06/07 profile) to $136.00 in the underlying.

DIA $137.74 +1.35% ...

Jeff Bailey : 7/12/2007 1:27:23 PM

QQQQ $49.26 +0.907% ... NDX 2003.55 +0.98% ... I know at least ONE bear is scrambling to find out where the NDX OI is at.

Jeff Bailey : 7/12/2007 1:26:11 PM

Better check CME July open interest too. Where's the OI at? Where would a NAKED call squeeze strike be at?

Find out NOW, not LATER!!!!!

Jeff Bailey : 7/12/2007 1:24:51 PM

CME $587.03 +1.20% ...

Jeff Bailey : 7/12/2007 1:23:56 PM

Email Question: ... Jeff: I bought some CME shares per your trade profile, but not even close to 100. I'm thinking of selling a July 610 or 620 call. What do you think?

Reply: ... I don't know how many shares you have, so difficult to guide. However, what you need to do is this.

IF selling $610 at current bid of $2.45 with Implied Vol=0.2802, what does your trade position look like IF CME trades $610 and you have to either stand and deliver 100 shares of CME (probably can't do), or you have to BUY BACK that call?

For instance, some may be long 9 shares per my MM profile at $557. Trade is currently up $270.

IF CME trades $610, we'd be up $477.

If CME trades 610 tomorrow, what will the $610 Call be trading?

Now plug in YOUR share amount and assess RISK/REWARD!!!

Jeff Bailey : 7/12/2007 1:10:17 PM

cl07q +5.48% last 20-days. rb07q +0.89% last 20-days.

Was squared up yesterday (see 07/11/07 11:57:48 AM MM)

Jeff Bailey : 7/12/2007 1:07:49 PM

Oh my! Unleaded ... what a turn

Jeff Bailey : 7/12/2007 1:01:43 PM

Remember ... selling a PUT option is the OBLIGATION to BUY at the strike. When a futures short gets on the "wrong side," then he/she may hold the futures position, even as it goes against them, but hedge it by SELLING NAKED puts in the appropriate weighting to get things squared up.

Just another reason traders should learn to utilize POSITION SIZE appropriate to their account when trading anything. Leave yourself some options to hedge things.

Jeff Bailey : 7/12/2007 12:59:17 PM

If the futures side is on the "wrong side" ... I.E. "aggressive short", then PUT OPTIONS will be sold with vengeance by the institutional trader.

Jeff Bailey : 7/12/2007 12:57:52 PM

Keene ... gotcha! Into an expiration, options are leverage instruments. Therefore, futures will be utilized to hedge that leverage if the NAKED side of the option gets on the "wrong side"

Jeff Bailey : 7/12/2007 12:56:06 PM

Yep ... BA reason enough to bring it pay ourselves. I tend to trade my commentary/observations. "Give me a reason" as they say ...

Jane Fox : 7/12/2007 12:55:08 PM

Here is how the markets are trading in relation to their PDRs. Link

Jeff Bailey : 7/12/2007 12:54:17 PM

Dow 30 Components with their respective Dn/UpTick Vol's Link

Jane Fox : 7/12/2007 12:51:55 PM

Good observation Keene (12:47 post). The TICKS are quite neutral and do not reflect the bullishness in the AD line/volume and VIX. Link

Keene Little : 7/12/2007 12:51:33 PM

Jeff, I use cash for tick readings and a-d line--both from QCharts.

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

pretty even for that market.

Jeff Bailey : 7/12/2007 12:50:03 PM

DIA 846:722

Jeff Bailey : 7/12/2007 12:49:48 PM

YM up/dn 16:15

Jeff Bailey : 7/12/2007 12:48:36 PM

Same on both cash and futures Keene?

Jeff Bailey : 7/12/2007 12:47:46 PM

Don't need to do the "all at once" ... just as I've tought traders you don't need to go long/short, or put/call all at once, you don't need to exit all at once either.

Keene Little : 7/12/2007 12:47:40 PM

The strange thing about today is that we have the indexes up so strong and yet the tick reading is very neutral--up and down ticks are pretty much equal. And after this morning's strong leg up the NYSE a-d line has dropped: Link This looks a bit suspicious to me.

Jeff Bailey : 7/12/2007 12:46:29 PM

Pay yourself ...

Jeff Bailey : 7/12/2007 12:45:38 PM

For DIA traders with 5, 10, 20 lots, I think selling 1/2 of your positions not a bad idea.

I.E ... selling 1 of 2 is 1/2.

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

Olin Corp. (OLN) $22.08 +2.31% ... notable new 52-weeker.

Jeff Bailey : 7/12/2007 12:34:25 PM

VXN.X 16.48 -6.04% ... while we've got the premium.

Jeff Bailey : 7/12/2007 12:33:55 PM

Swing trade bullish call exit alert ... Let's go ahead and sell the one (1) eBay EBAY July $35 Call (XBA-GG) at the bid of $0.65.

EBAY $34.02 +1.28% ...

Jeff Bailey : 7/12/2007 12:31:54 PM

Valero Energy (VLO) $76.73 -1.18% ... slips red.

Jeff Bailey : 7/12/2007 12:30:08 PM

VXO.X 14.84 -10.38% ... sits on WEEKLY Pivot.

Jeff Bailey : 7/12/2007 12:29:27 PM

Bring it back from "overweight" the Dow.

Jeff Bailey : 7/12/2007 12:28:55 PM

Swing trade long sell partial call alert ... Let's "chuckle on our way to the bank" and exit one (1) of the Dow Diamonds DIA Aug $135 Calls (DAW-HE) at the bid of $4.20.

DIA $137.61 +1.27% ... and juuuust above WEEKLY R2.

Jane Fox : 7/12/2007 12:23:38 PM

I don't have CNBC on but I bet they are making a big deal about the DOW today. Link

Jane Fox : 7/12/2007 12:22:32 PM

My goodness gracious! The bulls are back in town in a big way. Link

Keene Little : 7/12/2007 12:20:29 PM

Bulls laugh at resistance today. Too much too fast, especially in front of opex week? It certainly has me wondering at this point.

Jeff Bailey : 7/12/2007 12:18:48 PM

I like to use VXO.X for the OEX and INDU.

Jeff Bailey : 7/12/2007 12:17:43 PM

VIX.X 14.96 -10.09% .... last 5-days +1.69%, last 20-days +7.31% ... shouldn't forget about our RUT and SPX traders.

Jeff Bailey : 7/12/2007 12:14:38 PM

NASDAQ a/d 1,986:933

Jeff Bailey : 7/12/2007 12:14:23 PM

NYSE a/d 2,246:935

Jeff Bailey : 7/12/2007 12:13:35 PM

VXN.X 16.59 -5.41% ... last 5-days +0.48%. last 20-days +4.07% ... As noted Monday evening, the heavy CALL OI was in the NDX.

Jeff Bailey : 7/12/2007 12:11:56 PM

NQ/NDX/QQQQ traders SHOULD do likewise.

Keene Little : 7/12/2007 12:09:07 PM

SPX is now hitting its shallow downtrend line from June 1st and its broken uptrend line from March, crossing near 1534.80. This could be tough resistance, especially with some short term negative divergences starting to show up on the charts.

Jeff Bailey : 7/12/2007 12:08:09 PM

Been hearing a lot of chatter regarding "aggressive short" in recent days.

Hopefully, my guidance to the contrary has helped save some accounts.

Jeff Bailey : 7/12/2007 12:08:05 PM

VXO.X 15.05 -9.11% ... over the last 5-days, VXO.X up 5.10% so more CALL SELLING/PUT BUYING than CALL BUYING/PUT SELLING.

over the last 20-days, VXO.X up 13.93% and even more CALL SELLING/PUT BUYING than CALL BUYING/PUT SELLING.

Important to understand this when looking at where the OI is.

Heavy CALL most likely short/naked.

Jeff Bailey : 7/12/2007 12:00:51 PM

DJX July Options Montage at this Link

Keene Little : 7/12/2007 11:49:43 AM

The DOW didn't stop at resistance so now it's not clear where resistance will be. With a break to a new all-time high you should now look for 13690 to be support on any pullback.

Jeff Bailey : 7/12/2007 11:40:59 AM

DIA July Options Montage (CBOE Volume Only) at this Link

Jeff Bailey : 7/12/2007 11:14:50 AM

Some comment last night about QQQQ and its options. No comment however regarding NDX's. I'll try and update NDX option montage's OI from 07/09/07 11:52:00 PM Link

Jeff Bailey : 7/12/2007 11:12:42 AM

VXN.X 16.79 -4.27% ... now under WEEKLY Pivot 17.02.

Jeff Bailey : 7/12/2007 11:11:32 AM

6.5 sessions until op-ex. 8.5 calendar days.

Jeff Bailey : 7/12/2007 11:10:42 AM

eBay July $35 Calls (XBA-GG) alert! ... currently $0.50 x $0.60. Will be monitoring for exit.

EBAY $33.67 +0.23% ...

$35 + $0.50 = $35.50.

Would love it for our 1/3 long position, but not certain it is realistic.

Keene Little : 7/12/2007 11:07:23 AM

The DOW is now at potential resistance but SPX has about another point or two to go. Watch for a shorting opportunity here.

Jeff Bailey : 7/12/2007 11:02:42 AM

Bullish swing trade long raise stop alert ... for the 1/3 position in shares of eBay (EBAY) $33.63 +0.11% ... to $33.20 from $29.80.

Jeff Bailey : 7/12/2007 10:57:47 AM

Dow Diamonds (DIA) $137.08 +0.86% ... Session high has been $137.13.

Jeff Bailey : 7/12/2007 10:56:48 AM

Dow Industrials (INDU) alert! 13,714 +1.00% Link ... See Monday's Market Wrap. Link

Jeff Bailey : 7/12/2007 10:54:20 AM

Research in Motion (RIMM) $215.30 +2.01% ... "bad tick" to $226.

Jeff Bailey : 7/12/2007 10:52:52 AM

President Bush: Troop Drawdown Based On Politics "Would Be A Disaster"

Jeff Bailey : 7/12/2007 10:52:15 AM

President Bush: "Not Surprising" Iraq Political Progress Lags Security

Jeff Bailey : 7/12/2007 10:51:18 AM

Ford To Use Soybean-Based Foam In Mustang Seats, Saving Oil

Jeff Bailey : 7/12/2007 10:49:19 AM

CRB Index (CRY) 324.12 +0.38% ... set to challenge its 50% retracement (325) of 5/11/06 high to recent 1/18/07 relative low.

Jane Fox : 7/12/2007 10:47:36 AM

Crude's high in August 2006 was 78.40 and it seems like it is bound and determined to reach those highs again. Link

Jeff Bailey : 7/12/2007 10:47:13 AM

Bank of Canada: May Need "Modest" Rate Increase, Inflation Risks Balanced

Jeff Bailey : 7/12/2007 10:45:43 AM

President Bush: Sending Rice, Gates To Middle East In Early August

Keene Little : 7/12/2007 10:45:09 AM

Gold got a nice bounce today and just tagged what could be the high for the bounce (YG emini shown here): Link The type of correction to the decline from April, since the June 13 low, called for the 2nd leg up to be equal to 162% of the 1st leg up (since it had a lower low in between them). That Fib projection is at 671.68 and this morning's high is 671.80 (so far). The wave pattern looks complete at this high and therefore makes for a good spot to try a short on gold. By the bearish wave count here, the next leg down should be a strong decline.

Jeff Bailey : 7/12/2007 10:43:29 AM

Rio Tinto Outbids Alcoa; Buys Alcan for $38 Billion ...

RIO $50.55 +2.39% ...

AL $99.00 +10.45% ...

AA $45.42 +6.99% ...

Jane Fox : 7/12/2007 10:40:27 AM

So I guess that answers the question, "Is the DOW making a higher low or not."

Jane Fox : 7/12/2007 10:39:40 AM

DOW makes a new yearly high. Link

Jane Fox : 7/12/2007 10:38:54 AM

And now the short makes it to full target but we we were stopped.

Jeff Bailey : 7/12/2007 10:38:24 AM

Weekly natural gas stockpiles rose by 106 Bcf for the week ended July 6 to 2,627. Year-ago stockpiles stood at 2,691.

Jane Fox : 7/12/2007 10:36:34 AM

Internals very strong. Link

Jeff Bailey : 7/12/2007 10:35:31 AM

Intercontinental Exchange (ICE) $171.16 +2.48% Link ... X gets two (2) more squares. Has seen trade at $172.

Jane Fox : 7/12/2007 10:33:31 AM

Really thinking I should change to 11 or 12 ticks profit at least on the reversal type trades.

Jeff Bailey : 7/12/2007 10:33:18 AM

Chicago Merc (CME) $589.00 +1.54% ... "in the zone"

Jane Fox : 7/12/2007 10:32:48 AM

And you should be out.

Keene Little : 7/12/2007 10:35:05 AM

The other high flier, GOOG, is threatening to roll over and drop back below the trend line along the highs from January 2006. This trend line is the top of a large ascending wedge pattern so a drop back below it leaves a potential throw-over to finish its rally. Either a drop below 540 or another push up to about 551 would have leaning short on this one. Link

Jane Fox : 7/12/2007 10:32:28 AM

I would have moved it to at least 854.20 just over the 854.00

Jane Fox : 7/12/2007 10:32:10 AM

Did U move your stop down?

Jane Fox : 7/12/2007 10:31:43 AM

Back and I see ER has hit a low of 852.80 3 ticks from our target.

Jeff Bailey : 7/12/2007 10:29:51 AM

BKX +1.29%, OIH +1.29%, OIX +1.19%, BIX +1.04% are sector winners.

Jeff Bailey : 7/12/2007 10:28:54 AM

BTK.X -0.25% and XAL.X (unch) ... are sector losers.

Keene Little : 7/12/2007 10:28:27 AM

As Jeff and I were commenting last night, CME rang the bell at the 589-590 potential resistance this morning. This is a good level to consider a short play on CME. If it manages to push a little higher, and the pattern from yesterday's low suggests it could, the broken uptrend line from April 2005 is near 593. Its high so far is 590.00. Link

Jeff Bailey : 7/12/2007 10:23:04 AM

Oh my! ... Alcoa (AA) $45.48 +7.18% ... #1 most active. #21 weighted INDU/DIA component.

Keene Little : 7/12/2007 10:22:17 AM

By not making a new high yet above Monday's (which was 1534.26), SPX has not triggered its bullish wave count and leaves the door still open for the bears. In its 3-wave move up from yesterday the 2nd leg up will reach 162% of the 1st leg at 1532.71. That would close Tuesday's gap down (at 1531.99). Link

If it were to stop there and turn back down then it would be possible to consider the 3-wave bounce, as big as it is, to be just another correction of the previous decline, as it's been doing since the June 1st high. All it means at this point is that bulls can't take anything for granted here.

Jane Fox : 7/12/2007 10:16:46 AM

I am so sorry but I have to leave for a while. If price gets to 853.00 bring the stop down to 854.80. alert

Jane Fox : 7/12/2007 10:12:08 AM

Let's lower the stop to 855.20 which is just over the 855.00

Jane Fox : 7/12/2007 10:10:45 AM

Stop is at 855.7 and target is 852.50. I will be bringing the stop down soon.

Jane Fox : 7/12/2007 10:10:13 AM

Triggered short at 853.80.

Jeff Bailey : 7/12/2007 10:08:17 AM

Strong retail sales reports this morning.

Makes "sense" based on those consumer credit figures. (see Monday's MM 04:23:38).

Jane Fox : 7/12/2007 10:07:27 AM

If we get triggered short you know the target. 853.80 - 1.3 = 852.50

Keene Little : 7/12/2007 10:07:02 AM

A 3-wave move up for the DOW from yesterday's low, with the 2nd leg up achieving 162% of the 1st leg, could find resistance at 13711. This matches the broken uptrend line from March (and the DOW has proven it loves to push higher just underneath broken uptrend lines). So watch for potential resistance there. Link

Instead of going flat from 13711 (assuming it finds resistance there) and then pressing higher this afternoon, we could see a stronger pullback to the 12575 area by Monday which would then set up another rally leg. As I've said, expect some whipsaw price action with little follow through on each leg. It's looking like we'll have a bullish opex but it may not be a smooth journey.

Jeff Bailey : 7/12/2007 10:06:04 AM

INDU a/d 28:2

Jane Fox : 7/12/2007 10:05:35 AM

Consolidation at daily highs suggests higher highs so hopefully our short is far enough away so we get the reversal and not caught up in this consolidation.

Jeff Bailey : 7/12/2007 10:05:31 AM

NASDAQ a/d 1,864:767

Jeff Bailey : 7/12/2007 10:05:16 AM

NYSE a/d 2,222:724

Jeff Bailey : 7/12/2007 9:58:33 AM

Dow Diamonds (DIA) $136.85 +0.69% ...

Jeff Bailey : 7/12/2007 9:57:45 AM

Look's like a trend day. One more "bull head" tomorrow via StockTrader's Almanac.

See Monday's 03:02:32 PM MM post Link

Jane Fox : 7/12/2007 9:56:01 AM

If we get triggered short at 853.80 the stop will be 855.70 which is just above daily highs.

Jane Fox : 7/12/2007 9:52:04 AM

I see an ER short at 853.80 now. alert

Jeff Bailey : 7/12/2007 9:52:06 AM

QQQQ $49.07 +0.53% ... that's a new 52-weeker above the $49.00 strike.

Keene Little : 7/12/2007 9:46:23 AM

Typical pattern here would be for this spike up to then go flat on us for the rest of the morning before proceeding higher again (to then be followed by another big pullback). But so far it looks like you should be running with the bulls.

Jane Fox : 7/12/2007 9:45:52 AM

ER is overbot so looking for an ER short - which will be a counter trend trade.

Keene Little : 7/12/2007 9:45:20 AM

The morning rally has kept going so that's bullish. It's looking like the pullback from Monday's high could be complete and now we'll continue the rally. With the 3-wave price action in the rallies and pullbacks it's giving me the impression we're going to see a choppy rally into next week. That could mean some wild whipsaws, which would be exacerbated by opex. Don't be afraid to take profits in both directions if you're trading short term moves.

Jane Fox : 7/12/2007 9:35:42 AM

ES above its PDH and VIX below its PDL. All is well in bull country.

Jane Fox : 7/12/2007 9:35:09 AM

EGADS TRIN is 0.51 and falling.

Jane Fox : 7/12/2007 9:34:51 AM

AD line is a bullish +1188

Jane Fox : 7/12/2007 9:30:40 AM

The US $ is probably going to retrace here and could easily revisit the upper trendline which will put downward pressure on Gold so you may want to wait for a long Gold. Link

Keene Little : 7/12/2007 9:29:31 AM

Watch for the possibility of a gap n crap opening. Two equal legs up from yesterday's low for ES is at 1535.25, right where it's currently trading as we near the open. If it continues rallying above that then we've got something more bullish to trade.

Jane Fox : 7/12/2007 9:24:17 AM

The other part of the bullish formation is the MACD falling as price moves sideways. So I think we will break resistance before support.

Jane Fox : 7/12/2007 9:23:20 AM

My commnet to that last post is the tried and true rule I always abide by is; "Consolidation at daily (and in this case yearly) highs usually breaks higher.

Jane Fox : 7/12/2007 9:21:08 AM

ANNANDALE, Va. (MarketWatch) -- Is that a triple-top forming in the stock market?

That question was already on many traders' minds before Tuesday's trading session. That's because the Dow Jones Industrial Average ($INDU) on Monday approached the same 13,650-to-13,750 region that twice before in recent weeks had stopped the market's advance - first in early June and then again in mid June. Would it stop it again?

Tuesday's 148-point plunge in the Dow certainly points toward a "yes" answer.

But you may want to think twice before you rush to sell your equity holdings. Ominous as the Dow's chart formation currently looks, technicians say that it will take a lot more market weakness to confirm that a top has indeed been formed.

One reason may be obvious, but is nevertheless worth stressing: A third failure to break through the 13,650-to-13,750 area does not in and of itself constitute a triple top. After all, it could be that, after failing to break through those levels, the market merely enters an extended trading range. A minimum condition for a triple-top to have been formed is for the Dow to drop below the valleys that followed the first and second tops.

Those troughs are in the 13,200 to 13,300 range, which is 200 to 300 points below where the Dow closed on Tuesday.

But even if the market were to drop below the 13,200-to-13,300 region, it still wouldn't necessarily constitute a true triple top.

Jane Fox : 7/12/2007 9:19:27 AM

So you have to ask yourself, "is the DOW making a higher low or not." Link

Jane Fox : 7/12/2007 9:06:58 AM

Gold is telling me it is now time to buy. I wish the jtHMA charts agreed but this is one market I have learned to not use the jtHMA indicator. Link

Jane Fox : 7/12/2007 9:05:07 AM

NEW YORK (MarketWatch) -- Gold futures rose early Thursday, as the dollar fell to new lows against the euro and the sterling, underpinning investment demand for the precious metal.

Gold for August delivery rose $4.50 at $666.60 an ounce on the New York Mercantile Exchange. "The reliable combination of a rise in energy prices plus a renewed decline in the U.S. dollar sent gold prices right back to the top of their recent trading range early on Thursday," said Jon Nadler, analyst at Kitco Bullion Dealers, in a research note.

On the currency markets, the dollar fell to a new record low against the euro and a 26-year trough against the British pound Thursday, continuing its recent slide on fears over the U.S. subprime-mortgage market and potential economic weakness.

Jane Fox : 7/12/2007 9:01:24 AM

Ah gee I was hoping Crude would pull back so I could get a jtHMA buy but I never did get the signal although crude's rally is helping Gold hold its head above water.

I got a jtHMA sell signal on Gold yesterday and I was just about to post it and I thought no I don't think I will because this market has too many outside influences on it that make the charts less reliable. So far looks like a good idea. Link

Jane Fox : 7/12/2007 8:57:34 AM

WASHINGTON (MarketWatch) - The U.S. trade deficit widened in May by 2.3% to $60 billion as expected, on record trade flows across U.S. borders to meet rising demand at home and abroad, the Commerce Department reported Thursday.

Reflecting a strong global economy, exports from the United States increased 2.2% to a record $132 billion, but imports of goods and services into the United States grew faster at 2.3%, rising to a record $192.1 billion.

The increase in imports was largely driven by higher prices, not higher volumes. In real terms (that is, adjusted for price changes), imports rose 1.4% while exports increased 2.4%. The real trade deficit was essentially unchanged.

The nominal trade deficit - the difference between imports and exports - was revised slightly higher in April to $58.7 billion from $58.5 billion.

Through the first five months of the year, the trade deficit is running about 7% lower than in the same period in 2006. Exports are up 10.8% year-to-date. Imports are up 4.5%.

The growth in imports in May was led by industrial materials and supplies, particularly crude oil. Imports of petroleum increased to $19 billion, the highest since September. The average price of an imported barrel of oil was also the highest since September at $59.36.

Imports from the Organization of Petroleum-Exporting Countries rose to a record $14.6 billion in the month.

Jane Fox : 7/12/2007 8:56:56 AM

WASHINGTON (MarketWatch) -- First-time claims for state unemployment benefits fell last week to their lowest level since the middle of May, the Labor Department reported Thursday.

For the week ended July 7, initial claims dropped by 12,000 to stand at 308,000, the department said. It was the lowest level of initial claims seen since May 12.

The four-week moving average of new claims, meanwhile, fell by 1,500, sinking to 317,750. The four-week average is sometimes considered a better indicator because it smoothes out distortions like strikes or weather-related events.

The number of people continuing to collect unemployment benefits, meanwhile, fell in the week ended June 30 to 2.55 million, down 4,000. The four-week average of continuing claims rose by 17,500, hitting 2.52 million.

The insured unemployment rate, which tracks the percentage of those eligible for benefits who are receiving claims, was 1.9%, the Labor Department's data showed.

Jane Fox : 7/12/2007 8:51:51 AM

Yesterday all markets closed strong so it was not surprising that they all broke their PDHs overnight. Link

Keene Little : 7/12/2007 8:38:51 AM

Nice run up in the equity futures since 6:00 AM. It always makes me wonder if they're being manipulated higher (easy to do in the very light volume premarket session) to help sellers after the cash open. This being Thursday before opex week, the head fake day, be careful about an initial move this morning that could get a fast reversal.

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