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Keene Little : 9/13/2007 10:11:10 PM

Friday's pivot tables: Link and Link

It was a strange day on Thursday and it appeared there might have been an effort to drive the more visible indices (DOW and S&P) higher (for Bush?). Internal market breadth did not support the rally either. But the charts are based on price so we deal with that.

If SPX drops back down on Friday then the pattern I showed for Thursday still holds (just delayed a day). Price stopped on the broken downtrend line from July 19th so if that holds and price pushes higher again then the bearish wave count that I show will likely be negated: Link

The techs didn't participate as much in Thursday's rally and small caps even less. Those are the two indices to short if weakness continues. It's possible we're seeing rotation into the blue chips again. A small push higher for NDX could take it to 2020 for another retest of its broken uptrend line from August 16th otherwise it should drop from here: Link

As weak as the RUT has been, if the market pushes higher still then we could see another leg up in the RUT that finishes an ascending wedge pattern for the rally off the Sept 10th low, so perhaps up to close its Sept 7th gap at 792.55. Any further drop on Friday would likely negate that pattern: Link

OI Technical Staff : 9/13/2007 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The Market Monitor has been archived.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.

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Linda Piazza : 9/13/2007 5:39:51 PM

I will be out of town tomorrow for a funeral, so won't be on the Market Monitor. The Fed has a $5.000 billion repo from today maturing tomorrow, so anything below that is a net drain and anything above it is a net add. For information on the repos, you can check this site: Link As I was researching the Wrap for tonight, I learned that banks came to the discount window yesterday for the largest amounts since 9/11.

Jeff Bailey : 9/13/2007 5:01:11 PM

Current OPEN MM Profiles that I've made and Watch List found at this Link (see also 12:44:09 PM)

OLN-AD are $1.70 x $1.95
DAZ-LN are $1.55 x 1.70
BDQ-UJ are $0.00 x $0.05
SLM-VI are $1.50 x $2.00
GG-AE are $4.00 x $4.10
IOW-VZ $3.25 x $3.35
IWW-UT are $0.58 x $0.64
BHI-AR are $5.30 x $5.60

Jeff Bailey : 9/13/2007 4:44:12 PM

Closing Internals found at this Link

Jeff Bailey : 9/13/2007 4:33:02 PM

Closing U.S. Market Watch found at this Link

Jane Fox : 9/13/2007 4:00:58 PM

Full docket tomorrow:

8:30a.m. August Import Prices. Expected: +0.1%. Previous: +1.5%.

8:30a.m. August Retail & Food Sales. Expected: +0.4%. Previous: +0.3%.

8:30a.m. August Retail & Food Sales, Ex-Autos. Expected: +0.3%. Previous: +0.4%.

8:30a.m. 2Q Current Account Balance. Expected: -190B. Previous: -$192.6B.

9:15a.m. August Industrial Production. Expected: +0.3%. Previous: +0.3%.

9:15a.m. August Capacity Utilization. Expected: 82.1%. Previous: 81.9.

10:00a.m. July Business Inventories. Expected: +0.3%. Previous: +0.4%.

10:00a.m. Mid-Sep Reuters/U Of Mich Sentiment Index. Previous: 83.4.

Jane Fox : 9/13/2007 3:58:59 PM

And the SPX closed above its 50/100EMA resistance. This is a very good sign for the bulls. Link

Jeff Bailey : 9/13/2007 3:58:11 PM

Should be "balanced" now. Looking good.

Jeff Bailey : 9/13/2007 3:54:04 PM

DXY 79.53 +0.20% (30-min delayed) ...

Jeff Bailey : 9/13/2007 3:53:39 PM

Swing trade call exit partial alert! ... let's sell one (1) of the Goldcorp GG Jan $25 Calls (GG-AE) at the bid of $4.10.

GG $27.37 +0.32% ...

Linda Piazza : 9/13/2007 3:50:34 PM

There goes the SOX, going negative and dropping below the 200-ema. So far, it's still above the 200-sma, though. The SOX, RUT, and MID just have not behaved with all-out enthusiasm today. The MID is back below its 200-sma after piercing it both yesterday and today.

Jeff Bailey : 9/13/2007 3:37:30 PM

Indonesia Lifts Tsunami Warning (update)

DJ- Indonesia issued and then lifted tsunami warnings throughout the day Thursday, the last one for a 6.2-magnitude tremor that struck at 11:09 p.m.

The warnings came after powerful earthquakes and dozens of aftershocks jolted the nation, damaging hundreds of houses and spawning a three-meter-high tsunami. But a quirk of nature sent the full force of the waves out to sea, and there was no repeat of the devastating 2004 Indian Ocean tsunami.

At least 10 people were killed and scores injured in the three strongest tremors, which struck within a 24-hour period.

The 8.4-magnitude quake that first shook Southeast Asia on Wednesday was the strongest this year. But the huge mass of water it spawned was pushed to sea rather than land, said Mike Turnbull, a seismologist at Australia's Central Queensland University.

"It's a quirk of nature that this is how it happened," he said, noting that pressure between the shifting Australian Indian and Asian plates has been building up over hundreds of thousands of years. "It could have quite easily have been the other way."

A three-meter wall of water slammed into at least one fishing village on Sumatra, the island ravaged by the 2004 disaster that killed more than 230,000 people in a dozen nations.

A dozen houses were swept out to sea. Smaller waves were recorded further down the coast and on at least one nearby island.

Two powerful temblors - magnitudes 7.8 and 7.1 - followed on Thursday off Sumatra and a smaller quake also shook Sulawesi island, thousands of kilometers to the east, the U.S. Geological Survey said.

The worst destruction was caused by the jolts along the coast, especially in the Sumatran city of Padang. Almost all the quakes were less than 200 kilometers from the shore and around 20 kilometers deep, the USGS said.

More than 30 aftershocks have rattled the region in the last day and many people refused to return to their homes, fearing a repeat of the 2004 tsunami. Nearly two-thirds of the deaths in that disaster were in nearby Aceh province.

Jeff Bailey : 9/13/2007 3:31:01 PM

Motiva Port Arther Refinery To Be Shut At Least 5-Days

DJ- Motiva Enterprises LLC's Port Arthur, Texas, refinery will likely remain shut for at least five days, a person familiar with refinery operations said Thursday afternoon.

The 285,000 barrels-a-day refinery shut abruptly as Hurricane Humberto pummeled the coast and knocked out power early Thursday. Royal Dutch Shell PLC (RDSB.LN), one of the refinery's co-owners, acknowledged the outage, but did not immediately return further calls for comment.

The refinery had initiated shutdown procedures just before the plant lost power, the person said. "Before they could get things shut down, they lost power and steam," he said.

The rapid closure of the refinery, known as a "cold shutdown," makes the restart process more difficult. Product remains lodged in towers and pipes, and can harden if left for too long - a problem that plagued refiners after hurricanes Katrina and Rita in 2005.

The refinery's key gasoline-producing unit, known as a fluid catalytic cracker, may have a more prolonged outage than other refinery units, the person said. The unit has had operational difficulties over the past month, and operated for only one day between Aug. 10 and Sept. 10, according to previous reports from people familiar with the plant.

The refinery still lacks power, though Motiva is supplying the plant with power generators from its plants in Louisiana, which will supply power to administrative buildings, the person said.

Beyond the power outage, the refinery sustained some damage to its cooling towers, which still need to be checked, the person said. "There's a little insulation missing, but nothing serious," he said. In the wake of Hurricane Rita, significant portions of installation needed to be restored to refinery units in the area.

Royal Dutch Shell PLC owns Motiva jointly with Saudi Refining, Inc.

Keene Little : 9/13/2007 3:26:33 PM

I've got to leave for the rest of the day and will be back later this evening to update charts and pivot tables. Good luck into the close.

Keene Little : 9/13/2007 3:25:02 PM

SPX also just bounced off its broken downtrend line from July 19th.

Keene Little : 9/13/2007 3:24:17 PM

But if we're just getting a 3-wave pullback from today's high then two equal legs down is at SPX 1482.40 (ES 1496.75) and the uptrend line from Monday is near SPX 1481.50. Once those levels are broken then we have better evidence of a high being put in.

Keene Little : 9/13/2007 3:20:42 PM

I think that little 3-wave bounce to SPX 1488 was the right place to get short. Your stop should now be immediately lowered to just above 1488 (ES 1502.50 so 1503.00).

Keene Little : 9/13/2007 3:04:06 PM

If the current little bounce in SPX is to be just a correction of the leg down off today's high then it should stall at or below 1488 and could be worth an attempt at a short here against today's high.

Jeff Bailey : 9/13/2007 3:02:29 PM

03:00 Market Watch found at this Link

Linda Piazza : 9/13/2007 2:56:00 PM

Here's a sneak peak at what happens in Asia and Europe tonight, taken from my Wrap for tonight:

About 12:30 am, Japan releases two numbers related to its industrial production. Perhaps more importantly, tomorrow, Germany, one of the world's biggest economies, releases August CPI numbers at 2:00 EST. August HICP (Harmonized Index of Consumer Prices) will also be released for the EU, and this is a key inflation measure for the ECB. The ECB's Jean-Claude Trichet affirmed as late as this week that the ECB remains on inflation watch and has not abdicated the possibility of raising rates again. Any of these could impact trading tomorrow and they all occur before any of our scheduled releases.

Linda Piazza : 9/13/2007 2:54:11 PM

The USDJPY is at 115.28, near the top of its range, but still just below the top of the gap from last Friday morning.

Linda Piazza : 9/13/2007 2:52:52 PM

I will not be on the Monitor tomorrow, as I am going out of town to a funeral.

Jane Fox : 9/13/2007 2:46:30 PM

And the DOW to about 13623. Link

Jeff Bailey : 9/13/2007 2:50:07 PM

Educational Contest: (see below at 01:55:14 AM)

09/12/07 Closing option prices for "Stock A" and "Stock B" Link

If you chose to purchase the Stock B Oct. Call, then by default, you will have purchased the Stock A Oct. Put


If you chose to purchase the Stock A Oct. Call, then by default, you will have purchased the Stock B Oct. Put

Jane Fox : 9/13/2007 2:45:28 PM

I suspect the SPX will get to about 1516, the upper trendline before we see any kind of retracement. Link

Jane Fox : 9/13/2007 2:42:27 PM

WASHINGTON (MarketWatch) - The U.S. budget deficit widened to $117 billion in August as government spending rose by nearly 30% compared with a year ago to a record $283.5 billion, the Treasury Department reported Thursday.

The huge increase in outlays was due to a quirk in the calendar, which pushed Social Security and other payments that are usually paid in September into August because the Labor Day holiday was on Sept. 3.

Meanwhile, receipts increased about 8% to $166.5 billion in August.

A year ago in August, the deficit totaled $64.7 billion. The August 2007 deficit of $117 billion was close to the $115 billion expected by the Congressional Budget Office.

Jane Fox : 9/13/2007 2:33:48 PM

DAteline WSJ - Former Fed Chairman Alan Greenspan disputed that he would have responded to the recent market turmoil as quickly as he did earlier this decade, according to the CBS program "60 Minutes."

Asked during an interview for a show to be broadcast Sunday if he would have acted as dramatically and quickly now as when he was chairman in 2001, he said, "I'm not sure that's true," the program said in a press release.

"We were dealing in an environment back then where inflation was easing. We could have acted without the fear of stoking inflationary pressures. You can't do that anymore..I'm not certain I would have done anything different," if he was chairman today, he told interviewer Lesley Stahl, according to the show. "I think [current Chairman Ben Bernanke] is doing an excellent job."

Mr. Greenspan said while he knew about the questionable subprime lending tactics, he "had no notion of how significant they had become until very late," the show quotes him as telling Ms. Stahl. "I really didn't get it until very late in 2005 and 2006." He disagrees with those, including some former Fed officials, who say the Fed was wrong to lower rates as much as it did earlier this decade. "It was our job to unfreeze the American banking system if we wanted the economy to function," 60 Minutes quotes him as saying. "This required that we keep rates modestly low."

Jeff Bailey : 9/13/2007 2:36:04 PM

US 9-Yr 11-Month Notes: 4.493%; 84.29% At High

DJ- The U.S. Treasury awarded $8.00 billion in 9-year 11-month notes at Thursday's auction at a high rate of 4.493%.

The Treasury received bids totaling $23.61 billion and accepted $8.00 billion, including $18.35 million of noncompetitive tenders, down from $155.33 million in noncompetitive tenders accepted at the previous 10-year note auction on Aug. 8.

The issue was a reopening of a note originally issued Aug. 15, 2007.

The Treasury received no bids from foreign and international monetary authority accounts on a noncompetitive bidding basis.

The bid-to-cover ratio, an indication of demand, was 2.95, Treasury said.

Tenders submitted at the high yield were allotted 84.29%.

The dollar price was 102.029801 and the coupon rate was set at 4.750%, or 4 3/4%.

The median rate was 4.475%; that is, 50% of the amount of accepted competitive bids were tendered at or below that rate.

Of the competitive bids accepted, 5% were tendered at or below the rate of 4.440%.

Accepted indirect bids for the 10-year note were 22.5% of the total, down from 32.1% in August.

The high rate was down from 4.855% at the previous 10-year note auction. The high rate was the lowest since 4.490% at the 10-year note auction Dec. 8, 2005.

The issue is dated Sept. 17, 2007, and matures on Aug. 15, 2017.

The CUSIP number on the 10-year notes is 912828HA1.

Keene Little : 9/13/2007 2:29:00 PM

Breaking below the low just before 1:00 PM should be confirmation that the high is in (the final thrust up out of the little sideways triangle pattern would mark the end of the rally). At this point though I'd like to see price break back below the downtrend line from July 19th, currently near 1483.80 and then the uptrend line from Monday near 1480. With today's strange price action I just don't trust the drop yet and wonder if it will get jammed higher again. Opex activities could certainly be influencing price action right now.

Linda Piazza : 9/13/2007 2:16:42 PM

The U.S. August budget deficit is $117 billion, with the year-ago level at $64.7 billion.

Jeff Bailey : 9/13/2007 2:16:37 PM

Baker Hughes (BHI) $87.09 +0.85% ... PnF chart Link

Keene Little : 9/13/2007 2:08:24 PM

There are times when EW will help figure out where you are and there are times when it won't. For the rally from Monday this is one of the latter times. The rally is an overlapping mess and has corrective wave structure written all over it. But tell that to the bulls who keep buying. Price is the final arbiter and even though the internals are negatively divergent against the new price highs that doesn't matter right now. It will but it's hard to judge this move when it's not following "normal" price action.

In the meantime I'm on the sidelines until this makes more sense to me. SPX just broke today's uptrend line so maybe that's it for the rally after hitting the trend line along the highs since Tuesday: Link

Jeff Bailey : 9/13/2007 2:04:02 PM

Disclosure: I currently hold bullish position in BHI.

Jeff Bailey : 9/13/2007 2:03:36 PM

Swing trade call option alert! ... for one (1) of the Baker Hughes BHI Jan'08 $90 Calls (BHI-AR) at the offer of $5.50.

No stop for now and target par $100.

BHI $86.99 +0.72% ...

Linda Piazza : 9/13/2007 1:35:29 PM

It's not just the Russell 2000, either, is it, Jane? (See Jane's 1:09:42 post.) The mid-caps (MID) only began breaking above yesterday's high a few minutes ago. The TRAN has been climbing most of today, but it only broke out above yesterday's high about an hour ago. That former market leader, the SOX, is only barely positive.

Keene Little : 9/13/2007 1:32:31 PM

There's a real lovefest going on with the brokers (XBD) today, up almost +2.9%. The 60-min chart shows a bounce off the Sept 10th low will have two equal legs up at 226.31 and just a little higher is the Sept 5th gap close at 226.87. The high so far (just hit) is 226.24. If this is to be just a corrective bounce then it could be topping right around here. Link

Jeff Bailey : 9/13/2007 1:32:24 PM

01:00 Internals found at this Link

Keene Little : 9/13/2007 1:26:25 PM

SPX is now a few ticks shy of closing its gap. Now we'll see if the bulls want to keep driving this higher. SPX is alos back up to the trend line along the highs since Tuesday. If it's going to fail it should fail around here. Otherwise it will be a bullish breakout (watch the head fake though).

Jeff Bailey : 9/13/2007 1:22:37 PM

RUT.X Alert! 784.81 +0.94% ... WEEKLY Pivot here. Begins to confirm strength in SPX.

Jane Fox : 9/13/2007 1:10:02 PM

But certainly bullish enough to not be thinking short.

Jane Fox : 9/13/2007 1:09:42 PM

VIX to new daily lows and AD volume to new daily highs is enough for me to stay long. DAX and UDSJPY are not making new daily highs so it is not a runaway bull market today. Just look at the Russell today and you will see it is not a runaway bull.

Keene Little : 9/13/2007 1:07:02 PM

We had a little triangle consolidation for the 1-1/2 hours and now pushing higher. The triangle formation points to the last leg up for this move so it's now time to watch for a rollover soon. Conservatively you can wait until price breaks back below the last low just before 1:00 PM.

Jeff Bailey : 9/13/2007 1:02:36 PM

01:00 Market Watch found at this Link

Jane Fox : 9/13/2007 12:56:25 PM

Someone forget to tell the Russell 2000 small caps we are in bullish mode now though. Link

Linda Piazza : 9/13/2007 12:56:11 PM

The BEAUMONT ENTERPRISE notes serious damage to the Golden Pass LNG terminal in Sabine Pass due to Hurricane Humberto.

Jane Fox : 9/13/2007 12:54:14 PM

Well the little red SPX is now saying I think I did, I think I did. Next stop 1500? Link

Linda Piazza : 9/13/2007 12:46:47 PM

The SOX still tests its 200-sma and -ema today. It's just above the 200-ema, having dipped to the 200-sma and then bounced. Equity bulls and especially bulls in the semis want to see that 200-ema support hold.

Jeff Bailey : 9/13/2007 12:44:09 PM

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

Jeff Bailey : 9/13/2007 12:27:08 PM

Swing trade call exit alert ... Let's exit the Johnson & Johnson JNJ Oct. $60 Call (JNJ-JL) at the bid of $3.70.

JNJ $63.17 +1.05% ...

Keene Little : 9/13/2007 12:24:25 PM

If we get some bearish divergences at this push higher now and it rolls back over after closing the Sept 5th gaps then that's the next place to try a short.

Jeff Bailey : 9/13/2007 12:18:07 PM


DJ- Look For Euro To Make More Record Highs With the European Central Bank diverging sharply from the dovish stance of the Federal Reserve, the euro looks set to hit even more record highs against the dollar, above and beyond the $1.3915 reached yesterday, writes Nicholas Hastings.

Jeff Bailey : 9/13/2007 12:15:36 PM


DJ- Bad bets to sell the yen and buy the Australian dollar as well as investments in stocks in the U.S., Norway and Finland send the Global Alpha hedge fund down 22.5% in August, Bloomberg News reports. Drop leaves fund down by a third this year.

Keene Little : 9/13/2007 11:57:28 AM

Sept YM closed its Sept 5th gap but Dec YM missed it by 2 points. The DOW was about 9 points shy of closing it. Sept ES was 1.50 points shy of closing its gap at 1489.50 while Dec ES was 2.25 points shy and SPX missed it by 3 points. Is this close enough? Another stab higher could do it for both of them. NQNDX has much further to go before closing its gap (about another 20 points) and the poor RUT hasn't even been able to close its Sept 7th gap nevermind its Sept 4th gap.

Linda Piazza : 9/13/2007 11:55:14 AM

A 9:40 report at the BEAUMONT ENTERPRISE online site adds TOTAL Petrochemicals USA as a Port Arthur area refinery with operations closed down due to the loss of power.

Linda Piazza : 9/13/2007 11:49:45 AM

A calendar in the OIN newsletter this weekend listed BSC and LEH earnings for today. However, Yahoo's events calendars for each company schedules BSC's for September 20 and LEH's for September 18. I'm not sure which is right, but I don't find reports for either today, so I'm assuming that the Yahoo calendar is correct.

Linda Piazza : 9/13/2007 11:39:56 AM

USDJPY at 115.34, having attained a day's high of 115.46. So far, so good for equity traders, or at least for some. The RUT, MID and TRAN are trying to play catch up now, but none has topped yesterday's high yet.

Jeff Bailey : 9/13/2007 11:35:36 AM


Jeff Bailey : 9/13/2007 11:30:50 AM

Answer to Keene's 11:28:56 could be bound in SPX/SPY Option Montage. (see yesterday's NDX/QQQQ)

Keene Little : 9/13/2007 11:28:56 AM

If Thursday is the head fake day before opex then I have to wonder what next week will be like.

Keene Little : 9/13/2007 11:27:56 AM

The first gap down on Sept 5th is probably where SPX is headed--1489.63. That would be the next and last place I'll try a short play. From there I'll just wait for a break down to indicate a trend change.

Jeff Bailey : 9/13/2007 11:26:08 AM

VIX Alert! ... 24.20 -3.04%

Jeff Bailey : 9/13/2007 11:11:55 AM

SPX's 5-day NH/NL ratio at last night's close was 37.2%, 10-day NH/NL ratio 51.4%.

5-day NH/NL ratio would need 44% to reverse back up. 10-day NH/NL ratio would need 56%.

Keene Little : 9/13/2007 11:08:14 AM

This is the short play setup on SPX. Now we'll see if resistance holds or not. Link

Jeff Bailey : 9/13/2007 11:08:10 AM

DJ- Pemex Tula Refinery Output Down 50% On Bombing

Linda Piazza : 9/13/2007 11:06:57 AM

Al Wolfe send the following information: "Entergy and everyone else got caught off guard with this one as it formed in a day. Having lived in SE LA for 10yrs before moving over here, I watched Entergy and the other utilities move massive amounts of equipment and people into place in advance of a storm. Without that kind of preparation this time, it is going to take a lot longer for them to respond to any widespread outages than would normally be the case."

That's my impression, too. The governor sent troops into the area, but scrambled to do it after the fact rather than before, if I'm reading correctly.

Jeff Bailey : 9/13/2007 11:04:46 AM

11:00 Market Watch found at this Link

Keene Little : 9/13/2007 11:03:43 AM

At the same place, SPX 1485, it's at the trend line along the highs since Sept 11th. Not a bad place to try shorting it again.

Keene Little : 9/13/2007 11:02:47 AM

I'm back and I see I got stopped out shortly after the open. Bummer. SPX is now hitting the downtrend line from July 19th through the Sept 4th high. Watch for resistance to hold, or not, here.

Jeff Bailey : 9/13/2007 11:00:34 AM

RUT.X 779.72 +0.23% ...

Jeff Bailey : 9/13/2007 11:00:14 AM

INDU 13,422 +0.97% ...

Jeff Bailey : 9/13/2007 10:59:26 AM

Strong morning for "BIG and narrow"

Jeff Bailey : 9/13/2007 10:58:40 AM


DJ- Auto maker is pursuing a two-tier wage system that would allow the company to pay new hires less than veterans as negotiations heat up between the UAW and Big 3, reports The Detroit News, citing sources close to the talks.

GM $32.16 +6.31% ...

Jane Fox : 9/13/2007 10:57:25 AM

Internals are giving a green light to get long or buy the dips.

Jeff Bailey : 9/13/2007 10:57:20 AM


DJ- Shares jump 5% a day after fast-food giant boosts its annual dividend 50% to $1.50, payable Dec. 3 to holders of record Nov. 15. The fast-food giant expects to return $15 billion to $17 billion to shareholders between 2007 and 2009.

MCD $54.20 +5.82% ...

Jeff Bailey : 9/13/2007 10:56:06 AM


DJ- Shares jump 6% after lender says it has arranged for $12 billion in additional borrowing capacity through new or existing credit lines. It also reports its August mortgage loan fundings fell 17% from a year earlier.

CFC $17.75 +6.79% ...

Jeff Bailey : 9/13/2007 10:51:03 AM

Calibration for YM07Z is approximately 100 points. (Add 100 points to YM07U) regular session high/low and CLOSE for Pivot Level tabulations.

Linda Piazza : 9/13/2007 10:51:06 AM

USDJPY 115.28 after reaching a day's high of 115.34. It's now testing the top of that gap down from last Friday. So far, the correspondence in the direction of the USDJPY and some U.S. equities, at least as measured by the SPX, has held, but it certainly hasn't in the RUT, where I used to believe the strongest correspondence could be found. What does that mean?

I don't have a strong economic background. The only background I have is what I've taught myself. However, as you know, I've been on the watch for signs that the where-the-USDJPY-goes-equities-go relationship is unraveling. I certainly don't want to continue using something as an indicator of where equities might go if the inter-market relationship has changed, and they do change. Is this a sign? I'm not certain. Could it be that if any yen carry trades are being instituted, the money spent is not being weighted heavily toward small- and mid-caps (the MID also isn't gaining strongly) and more toward safe havens, such as big caps or maybe even bonds? That would be a sign of caution, certainly. It's not necessarily bearish, as I know that I'm exercising extreme caution myself right now without being necessarily bearish but just uncertain, but it's not an all-out endorsement of equity gains, either. Anyway, I don't know if that's what is happening.

Why am I going through this talking-things-out process? Not to convince you of anything other than that you need to be doing it, too. If you're going to dig into long Dow positions, for example, ask yourself why the Dow's sister index, the TRAN, is underperforming with respect to averages being tested, etc. Why do big caps seem to be outperforming small caps right now? What does that mean? Maybe your answers will be better than mine, but ask yourself those questions. I don't know the answer right now, but it certainly doesn't encourage me to give up my cautious stance, not if big money is showing signs of caution.

Jeff Bailey : 9/13/2007 10:32:48 AM

EIA: Weekly Nat. Gas Table at this Link ... Build of 64 Bcf.

Jane Fox : 9/13/2007 10:27:53 AM

This from a purely technical point of view (so far technical analysis has had little impact on this market though) - There is a very good chance Crude will fall back to the $74.00/bl level before it makes new yearly highs. Link

Jeff Bailey : 9/13/2007 10:25:38 AM

Valero Energy (VLO) $68.59 +2.75% ...

Jeff Bailey : 9/13/2007 10:24:50 AM

Oil Near Record On Refinery Outage ... AP Story Link

Jane Fox : 9/13/2007 10:23:42 AM

The bulls just need to make sure they do not fumble the ball today and close above the 50/100EMA confluence to keep the bullish story alive. Link

Linda Piazza : 9/13/2007 10:22:09 AM

USDJPY 115.26, still climbing. So far, this factor still favors long positions, although I'm worried about its reliability, giving the reason that it's rising.

Jeff Bailey : 9/13/2007 10:19:09 AM

NYSE NH/NL 38:66

NASDAQ 47:43

Jane Fox : 9/13/2007 10:17:28 AM

AD volume is telling you to stay long and don't even think short - at least not yet. That may change but for now this very important internal is telling me the bulls are lurking.

Jeff Bailey : 9/13/2007 10:16:54 AM

McDonalds (MCD) $53.61 +4.70% ... That's a new 52-weeker.

Jeff Bailey : 9/13/2007 10:15:27 AM

Please Note: Going forward, any mini-Dow futures trades that I profile will be for the December contract YM07Z.

Jeff Bailey : 9/13/2007 10:14:04 AM

10:10 Market Watch found at this Link

Linda Piazza : 9/13/2007 10:12:59 AM

The Fed has announced another $5.000 repo. That totals $21.000 billion in repos today, with $38.000 billion maturing today, for a net draw of $17.000 billion.

Linda Piazza : 9/13/2007 10:08:34 AM

I'm still reading in local online newspapers from the Beaumont/Port Arthur area that much of the area is still without power, but I'm not finding out much about the refineries. Wind damage in the area appears to be minimal when considering the storm's hurricane status, although at least one person has died. Honestly, residents are used to summer thunderstorms and hailstorms that do as much damage as I'm reading about, with the exception of the widespread power outages, so I don't want to be guilty of exaggeration. However, the power outage has caused problems with at least one refinery. Entergy reports that it will be several days before service is restored.

Jane Fox : 9/13/2007 9:59:03 AM

OK the internals have sort of straightened themselves out. AD volume never wavered and is continuing to make new daily highs (bullish); the VIX has turned around and is now making new daily lows (bullish); USDJPY is making new daily highs (bullish); and the DAX is still holding out and is trading midrange.

Safe to go back in the water - ya I think so but keep it long.

Linda Piazza : 9/13/2007 9:58:23 AM

Neither the small-caps (RUT) nor the mid-caps (MID) are participating in gains, either, unless my charts are way off. Hmm. SOX, RUT and MID not participating, TRAN just sort of sitting there. Big net draws on the repos as of right now . . . you read the tea leaves. Be cautious out there with long positions. Of course, I've been warning about that for two days with the SPX continuing to climb the entire time, so take my worries with a grain of salt.

Linda Piazza : 9/13/2007 9:55:01 AM

Two reports in the UK this morning indicated that the so-called subprime mess may be extending into the UK. Liquidity issues are impacting both residential and commercial real estate.

Linda Piazza : 9/13/2007 9:52:45 AM

The USDJPY has made it above 115.00, at 115.10 as I type. The top of Friday's gap is just ahead in the 115.30-115.35 region. Remember that the reason that the USDJPY is strengthening might not be as good a thing for equities as it's been in past. I'm just not sure. Japan's prime minister resigned yesterday, and amid political uncertainty, it's pretty much guaranteed that the BOJ will not be able to hike rates when it meets next, coincidentally on the same day as the election to replace the prime minister. But will big money want to jump into yen carry trades because of the weak yen, when they don't know what programs a new prime minister might lead and how that might impact future economic development? I'm just not so sure. So, if in bullish plays, be glad that the USDJPY is going your way, but don't give it the same importance you did previously. (Or I did previously.)

Jane Fox : 9/13/2007 9:51:23 AM

Here is a glimpse at the ON charts; they give you a clear picture of just how much selling has been done this morning in NQ and ER reflecting the bearishness I am seeing in "some" of the internals but not all. Link

Linda Piazza : 9/13/2007 9:49:08 AM

The SOX is not participating in gains today. Lehman upgraded Infineon, a SOX component, but downgraded STMicroelectronics, another SOX component. Lehman upgraded the European semis and semi equipment sectors.

Jane Fox : 9/13/2007 9:48:59 AM

AD line as fallen to a paltry +132 - the bears are getting stronger.

Jane Fox : 9/13/2007 9:48:25 AM

VIX is spiking and that is quite bearish supporting the new daily lows on the DAX chart. I see the USDJPY falling now as well.

Linda Piazza : 9/13/2007 9:47:58 AM

The Fed has announced two repos totaling $16.000 billion today. Since $38.000 billion (see my 8:29:49 post) mature today, that still leaves a $26.000 billion net draw so far.

Jane Fox : 9/13/2007 9:47:34 AM

Linda thank you very much for that uptodate report on Humberto.

Linda Piazza : 9/13/2007 9:46:44 AM

Residents were surprised to find yesterday that a tropical storm was off their shores, especially with that storm strengthening into a hurricane overnight. Valero was shut down due to a power outage with widespread power outages throughout the area.

Jane Fox : 9/13/2007 9:46:21 AM

AD volume is making new daily highs and is in a "get long and stay long" rally but I need to have the VIX on board before I say it is a get long and stay long type of day. DAX continues to make new daily lows and the USDJPY is making new daily highs. Internals are all confused and the result is the markets get pulled both ways.

Linda Piazza : 9/13/2007 9:45:21 AM

I'm from the Beaumont/Port Arthur area (Nederland) and have been on the phone this morning with relatives who still live in the area, including my mother-in-law. Many of you may know that Humberto moved straight through the Midcounty area early this morning. It was only a Category 1 and the area is used to monstrous thunderstorms anyway, but this is dumping massive amounts of rain. The only news I have about refineries (this is a hub of refineries, extending toward Lake Charles, which is the track of Humberto) is that Valero has had to shut down a refinery.

Jane Fox : 9/13/2007 9:38:42 AM

VIX is making new daily highs as the DAX is making new daily lows so all is not well for the bulls.

Jane Fox : 9/13/2007 9:37:45 AM

AD line is +955 so the bulls have control this morning.

Jane Fox : 9/13/2007 9:33:07 AM

A market that Linda watches and one that I have just recently started to use intraday as an internal is the US$ and Japanese Yen currency pair (Tradestation symbol USDJPY). Overnight it has been in rally mode supporting the bullishness we are seeing in the futures markets. Link

Jane Fox : 9/13/2007 9:28:38 AM

NEW YORK (MarketWatch) -- Hurricane Humberto packed 85 mile-an-hour winds Thursday and was expected to dump up to 15 inches of rain across parts of Texas, threatening parts of the energy-rich Gulf Coast region.

The storm punctuated worries gripping the energy markets, as evidenced by oil touching a record level just above $80 a barrel Wednesday on the New York Mercantile Exchange.

Jane Fox : 9/13/2007 9:24:13 AM

Crude didn't retrace too much over night and basically hovered at previous day highs.

US$ and Gold were trading almost tick for tick and they are supposed to be trading opposite to one another so there is something going on that is just not making sense. Yesterday Crude hit new all time highs and Gold fell. The US$ hit new yearly lows and Gold fell. What gives the "normal" relationship is crude rallies Gold rallies; US$ falls Gold rallies. This will right itself and I think it will be start with crude falling and fall hard.

The DAX is supporting the bullishness we are seeing in the American index futures. Link

Jane Fox : 9/13/2007 9:17:13 AM

NEW YORK (MarketWatch) -- Hurricane Humberto packed 85 mile-an-hour winds Thursday and was expected to dump up to 15 inches of rain across parts of Texas, threatening parts of the energy-rich Gulf Coast region.

The storm punctuated worries gripping the energy markets, as evidenced by oil touching a record level just above $80 a barrel Wednesday on the New York Mercantile Exchange.

Jane Fox : 9/13/2007 9:13:50 AM

Please be aware that all my futures comments as of today will be for the December contract. This is rollover Thursday and some roll to the new contract right off the bat - like me - and some wait until the volume of the new contract is greater than the outgoing contract. I have found the volume of the new contract overtakes the old contract usually within the first = hour and is why I start off with the new.

Overnight we were in rally mode and the DOW futures have even breached its previous day high but with rollover I would not putting too much into this. Link

Linda Piazza : 9/13/2007 8:33:56 AM

The USD/yen (USDJPY) saw strong gains last night. It's well into the gap down from last week. In fact, it's retraced 61.8% of the gap level. Remember that this time, I'm not so sure that the gain is a positive for U.S. equities as it's been because of the reason behind the gain. Political and other uncertainties in Japan mean that it's unlikely that the Bank of Japan will be able to raise rates, which is weakening the yen. However, does the reason behind that weakening--the uncertainty--encourage big money to borrow yen to gain funds to invest in equities, especially when those holding yen carry trades were so recently burned? I'm not so sure. So, note the climb, watch whether the gains continue, factor this into your thinking, but don't count on a positive trend here to automatically signal a positive trend in equities.

Linda Piazza : 9/13/2007 8:29:49 AM

A heft amount of repos mature today: $13.500 billion from yesterday, $3.500 billion from Tuesday, $16.00 billion from September 6, and $5.000 billion from August 30. That's a total of $38.000 billion.

Keene Little : 9/13/2007 8:22:53 AM

Futures had been trending down for most of the overnight session with ES down -5.25 to 1471. Then around 7:30 equity futures shot higher but I can't find out why. Could be the magic hand again. At any rate the move is endangering those of us who shorted the market against yesterday's highs. I'm using the cash indices for my stop especially since premarket manipulation in the futures is too easy.

I have to be away from the market for the first hour or so and therefore will miss the opening activity. If stopped out I'll just work on getting back in at a different level. The loss of momentum in yesterday's rally set up the short play so watch for a possible pop n drop this morning if they try to spike the shorts out of the market.

Jeff Bailey : 9/13/2007 3:03:18 AM

There's usually 2 "top of mind" stocks that gold bugs will think of. NEM Link and ABX Link

Jeff Bailey : 9/13/2007 3:00:50 AM

Goldcorp (GG) Link ... Dorsey/Wright measure the "raw" supply/demand of a stock and does not adjust historical prices when dividends are paid.

StockCharts.com does Link

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