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Jeff Bailey : 9/21/2007 2:19:50 AM

So! When being interviewed on CNBC tomorrow morning, alert listeners that while things are VERY GOOD/VERY BAD, from the August lows of 2,400, to Thursday evenings close (2,654) you're now witnessing some favorable signs that DEMAND is starting to outstrip SUPPLY as there has been a NET GAIN of 6% (from 34% to 40%), or 186 stocks to reversing higher PnF "buy signals."

And don't forget to tell listeners that this action begins to confirm the bullishness that your PRIMARY indicator, the VERY BROAD Nyse Bullish % (BPNYSE) began signaling on August 22, when it reversed up to "bull alert" at 38%.

Mention you turned bullish on GOOG Link August 21 and reiterated your stance on 9/11/07. Be humble, and let them know you will likely be suffering a loss at tomorrow's close in BIDU Link .

Jeff Bailey : 9/21/2007 1:57:23 AM

Bear Correction Alert! ... Thursday's action did see a net gain of 0.41%, or roughly 12 stocks in Dorsey/Wright's VERY BROAD Nasdaq Composite Bullish % (BPOTC). Roughly 3,112 stocks (see intra-day A/D lines). Link

At 40.36%, that means there are now 1,256 NASDAQ-Listed stocks that have point and figure "buy signals" associated with their charts.

Jeff Bailey : 9/21/2007 1:46:14 AM

Email Question: ... Looking back at the scare in August and the fact that nothing has really changed.

The market is 1%-2% from all time highs.

Inflation on the rise, dollar in the tank, the consumer slowing, $82 oil, etc.

What would you do with this rally gift?

I would go on CNBC and tell everyone how great things are and SELL, SELL, SELL!!!!!!!!!!!!!!!!!!

Your thoughts ladies and gentlemen of Market Monitor?

Jeff's Reply: ... While I (Jeff Bailey) said BUY the S&P 100 (OEX.X) in Monday evening's market wrap, and did not give a position size, or "go all in," if I were the writer of this email, then go on CNBC, but tell investors that your technical indicators did signal bullish the LARGE and NARROW, but then SELL HALF of your bullish position tomorrow morning and implement some type of ACCOUNT MANAGEMENT and RISK MANAGEMENT! Or at least "leg out" partial position (take partial profits, pay yourself) as I (Jeff Bailey) have demonstrated over the years.

I (Jeff Bailey) have been reading, listening for YEARS how TERRIBLE things are and SELL, SELL, SELL! Recently, the word "armageddon" has been a buzzword used by bloggers.

As for the Market Monitor, all of my profiled trades are followed and accounted for (updates and trade blotter), with account managment and risk management underway at all times!

I have also given traders different techniques for DEFINING a specific PRICE LEVEL for execution (entry/exit) for cash positions.

Pick the ONE that you are MOST comfortable with, then STICK with it!

If all else fails ... then use the "when in doubt, get out!"

But like you say, "the dollar is in the tank," so just sitting on cash is NOT an option.

Keene Little : 9/21/2007 12:21:24 AM

The charts of the various indices look very similar and I'm hoping we'll see another leg up to finish a 5-wave count from the Sept 10th low. That would then set up a great shorting opportunity. In the meantime a break of the downtrend lines from Wednesday should be a good opportunity to trade the long side but this being the last leg up (if we get it) could fail at any time.
DOW: Link
SPX: Link
RUT: Link

I've left a different wave count on NDX to show the possibility that the rally could be over and what the wave count would be in that case: Link Opex Fridays are normally pretty quiet so we may not get our answer right away but if price drops quickly then the bearish case is strengthened. Otherwise look for a break of the bull flag consolidations over the past two days for the signal to get long.

Jeff Bailey : 9/20/2007 11:58:22 PM

Excellent use of relative strength Tab!

Keene Little : 9/20/2007 11:57:35 PM

Friday's pivot tables: Link and Link

Tab Gilles : 9/20/2007 11:40:36 PM

Gold in Dollars versus Gold in Euros Link

OI Technical Staff : 9/20/2007 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 : 9/20/2007 8:33:53 PM

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

Jeff Bailey : 9/20/2007 5:28:53 PM

Fed Approves Discount Rate Cut By 2 Banks to 5.25%

DJ- The Federal Reserve Board said Thursday it has approved actions by two other district banks decreasing the discount rate to 5.25% from 5.75%.

The approval of the actions by the Fed banks of Philadelphia and Chicago is effective immediately, the Fed said in a statement.

On Tuesday, the Fed's board approved the 50-basis point decrease in the discount rate. In taking that action the Fed board approved requests submitted by the boards of directors of the Fed banks of Boston, New York, Cleveland, St. Louis, Minneapolis, Kansas City, and San Francisco.

On Wednesday, the board approved actions by three other district banks decreasing the rate to 5.25% from 5.75%. Those banks were Richmond, Atlanta, and Dallas.

Jeff Bailey : 9/20/2007 5:17:03 PM

Linda ... Prayers are with your granddaughter!

Jeff Bailey : 9/20/2007 5:12:49 PM

Closing Internals found at this Link

Linda Piazza : 9/20/2007 4:53:02 PM

I know, Jeff. Embarrassing, isn't it? That's what happens when you're out of all options that require action and are instead concentrating on the surgery dates piling up for your granddaughter. Fortunately, as I did already know, of course, SPY options trade through Friday and I also of course know that they're not cash settled but are instead settled with delivery of the SPY, so I'll just pay my commissions tomorrow to exit.

Jeff Bailey : 9/20/2007 4:34:50 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 9/20/2007 4:23:32 PM

Good gravy Linda!

Linda Piazza : 9/20/2007 3:57:41 PM

Sideways consolidation for the day, then. It fits with what daily charts were telling us was one possibility and with often-seen opex action, too. If you're in September positions that settle tomorrow morning, remember those outlandish settlement values we've had over some months lately as you decide whether to close out positions and trust settlement values tomorrow or not.

You can tell I've been out of my September spreads for a while. I'm a week behind and thought opex was next week! I wasn't concerned about it with regard to my SPY butterflies because my maximum loss is the debit and commissions it took to establish them, but I did think I had another week to watch and see what happened with them, as was obvious from my earlier comment!

Jeff Bailey : 9/20/2007 3:49:21 PM

iShares Silver (AMEX:SLV) $133.18 +3.49% ...

Jeff Bailey : 9/20/2007 3:48:14 PM

Bullish day trade long adjust position alert!

For the 1/2 position in shares of Coeur D' Alene Mines (CDE)

1) Close out 1/4 position here at $3.66 bid.

2) Hold remaining 1/4 with target of $3.80.

Keene Little : 9/20/2007 3:44:14 PM

I'm still thinking SPX 1525 settlement price tomorrow morning. So depending on how it finishes today we could get the rally started tomorrow.

Keene Little : 9/20/2007 3:26:04 PM

SPX continues to chop lower in its bull flag pattern (the bottom of which is quite a bit lower around 1510). Use a break of the downtrend line from yesterday's high, currently near 1523.60, as an opportunity to try a long trade (or wait for the break and pullback to retest, but the retest may not happen). Because it's a flag pattern I don't like the short side here but I prefer to wait for a break of the downtrend line before trying a long (trade potential is up to at least 1548 and that makes for a nice trade).

Jeff Bailey : 9/20/2007 3:25:16 PM

03:00 Internals found at this Link

Linda Piazza : 9/20/2007 3:18:31 PM

For the last 2 hours, the VIX has been maintaining 15-minute closes above the 15-minute 9-ema, the first time it's done so for that long since Monday afternoon. Now it's hitting key resistance on 15-minute closes just under 21.00, if you believe that support and resistance are important in the VIX, which I do. It's pulling back from that resistance as I type and is now at 20.42, just above the 9-ema, which is now at about 20.34. Bears want to see it stay above that on a 15-minute close and then push through 21. If that doesn't happen, they want it to stay above 19.99 and then push above 21.

Linda Piazza : 9/20/2007 3:10:12 PM

SPX attempting to hold to support near 1517.25-1517.75 on 30-minute closes. If it's not successful, the next downside target is from 1513-1513.25. If it is successful and attempts a bounce, watch for resistance near 1521-1522 on 30-minute closes.

Jeff Bailey : 9/20/2007 3:03:19 PM

03:00 Market Watch found at this Link

Linda Piazza : 9/20/2007 2:59:34 PM

The RUT's drop looks harder on the daily chart, but when you look at it on a 15-minute chart, the RUT is testing the congruent Keltner support channel line, near 807.09 on a 15-minute close for the RUT. Bears need to keep the RUT below that and then push it hard below the potential support showing up on the 30-minute chart just above 806.

Jane Fox : 9/20/2007 2:57:24 PM

The markets are not bullish today but certainly not what you would call bearish either. The daily chart of the DOW has not even retraced back into the upward channel which I think it will before it starts its next leg up. Link

Linda Piazza : 9/20/2007 2:56:59 PM

So far, bears are successful, but bears want to see the SPX continue to produce 15-minute closes below about 1521.25-1521.75 to maintain weakness and show that resistance is holding. The SPX has another Keltner support zone on the 30-minute chart near 1517.20, and the bears are going to have to push hard to get through that. Without that hard push, this action since my 2:19:30 post could all just fizzle out.

Keene Little : 9/20/2007 2:51:40 PM

The fed began cutting the rates about 2000/2001 and the market actually rallied 10%. I was short everything and watched while my heart stopped. THEN the market tanked just when I began covering. I was short some but closed others. I could not believe it rallied.

Now we have people talking about the market going higher and going long but it does not make sense. The dollar is weak, commodities are in "rally mode" (gold, oil...) and people have been purchasing treasuries (TNX yld down about 1%). This looks BEARISH to me... now throw in the weakness in the TRAN, accelerating bankruptcies and record foreclosures and it looks like a big setup to the downside....

does anyone see that????????????????

Yes, that's exactly what I've been warning--the market goes through brief relief rallies following Fed rate cuts and then tanks. Smart money selling into the folly rallies? That's what history says happens.

Linda Piazza : 9/20/2007 2:37:05 PM

Looks as if bears are the ones attempting the breakdown. (See my 2:19:30 post.) Will they be successful? The TRAN is hovering near its day's low, but hasn't produced a new day's low. The USDJPY has fallen steeply off the Tuesday night high, but it's currently bouncing from today's low. The general weakness in both today supports a more bearish tenor, but I'd feel better about drawing a conclusion about the successfulness of the current SPX push lower if the TRAN had reached a new intraday low and the USDJPY had at least rolled down again.

Keene Little : 9/20/2007 2:37:02 PM

As the choppy pullback continues today, and looks like a bull flag, it is causing me to reevaluate the potential pattern in the move up from Sept 10th. If price suddenly drops out the bottom of the bull flag then it would likely sell off fast (probably not until tomorrow if it happens) but right now the higher odds scenario is for a rally out of this consolidation. And that makes the pattern from the Sept 10th low look like it could give us an impulsive 5-wave advance (the consolidation since yesterday's high would be a 4th wave). Link

If the move up from Sept 10th is going to be a 5-wave move then it must be a c-wave. And equality with wave-A (the move up from Aug 16th to Aug 27th) would take SPX up to 1548. I'm showing a pullback to about 1518 for the current correction and then a 5th wave up from there (this is obviously speculation at this point). The 5th wave would then equal 62% of the 1st wave at the same 1548 but would achieve equality near 1568 which coincides with the top of its parallel up-channel for price action since Aug 16th.

That's quite a spread in upside targets but if we get another rally leg we'll at least have some levels to watch for potential resistance. But again, if price drops below the bull flag then additional upside potential would be negated.

Linda Piazza : 9/20/2007 2:19:55 PM

The SPX is hitting support that could be significant on 15-minute closes, from about 1520.40-1522.08. It's also being squeezed below the descending trendline off yesterday's high. Looks as if it's time now for something to happen, but it's always possible for prices to just move sideways, too. Anyway, this looks like a time to watch for an upside or downside breakout attempt. Watch the TRAN, VIX and USDJPY for some guidelines. You want the TRAN and USDJPY to move in the direction of your trade: the VIX, the opposite direction.

Jeff Bailey : 9/20/2007 2:16:11 PM

Disclosure(s) ... I currently own bullish position(s) in GG (from additional profile today) and CDE.

Jeff Bailey : 9/20/2007 2:15:04 PM

Day trade long alert! for 1/2 position in shares of Coeur D' Alene Mines (CDE) $3.65. Stop goes $3.61, target $3.75 by the close.

Linda Piazza : 9/20/2007 1:56:39 PM

We're coming through one typical stop-running time of day, from about 1:35-1:55 EST. Boy, was that exciting!

Linda Piazza : 9/20/2007 1:35:30 PM

Still no new LOD for the TRAN as the Keltner support now at 4832.55 holds on 15-minute closes. Not much going on that would indicate next direction for the OEX, SPX and Dow here.

Jane Fox : 9/20/2007 1:26:59 PM

Here is a daily SPX chart and I suspect this market to retrace to at least 1500 before it starts its next leg up. A better retracement would be to the 50EMA IMHO but we not get that much of retracement. Of course if the swing low at 1440 is breached I will be much less bullish than I am now. Link

Jane Fox : 9/20/2007 1:22:24 PM

AD volume is making new daily lows BUT the AD ratio is not. HMMMM

As you can see the VIX is not supporting that bearish move either. Link

Jeff Bailey : 9/20/2007 1:21:33 PM

01:00 Internals found at this Link

Jane Fox : 9/20/2007 1:15:05 PM

All the charts I had on my internals workspace were getting to be way too much but yet I still wanted them all. So I did a little experimenting and was able to put the AD volume, AD volume ratio and Vix on one chart and then the DAX and USDJPY on another. Much better.

In any case these are telling you it is choppy out there. Link

Linda Piazza : 9/20/2007 1:04:02 PM

USDJPY now at 114.46, climbing back toward that horizontal line that I had pegged as potential support in a chart on an earlier post. That's at about 114.60.

Jeff Bailey : 9/20/2007 1:02:03 PM

01:00 Market Watch found at this Link

Jeff Bailey : 9/20/2007 12:53:41 PM

Another historic moment here in the MM !

Jeff Bailey : 9/20/2007 12:53:09 PM

StreetTracks Gold (GLD) $72.50 +1.49% ... ~$725 spot.

Jeff Bailey : 9/20/2007 12:50:44 PM

Central Parity Alert! ... between Can$/US$.

Keene Little : 9/20/2007 12:47:34 PM

Are we having fun yet? Probably not if you're in a position waiting for this market to do something. This is the kind of day both sides sit glued to the screens watching tick by tick to see if it's going to go against them or for them, which makes for an un-fun day. Opex pinning seems to be underway. Instead of my guess that we'd see SPX 1550 for a settlement price it's looking instead like we're going to see it pinned to 1525.

Multiples of 25 are where the big contracts typically have higher OI. In fact the OI for the 1525 calls is almost 236K and is much higher than than the surrounding strikes. Same for the 1525 puts--the highest OI at 227K contracts and dwarfs the surrounding strikes. This almost guarantees that we'll see the market pinned right here into the close. Time to go read (or work on tonight's Wrap in my case, after getting the rest of my computer equipment set up now that I'm back in Seattle).

Jeff Bailey : 9/20/2007 12:47:20 PM

Gold Bugs Index ($HUI.X) WEEKLY Interval chart at this Link

Today we "roll" from very profitable call position, to OUT-THE-MONEY. Reduce capital exposure, but ready to further participate should history repeat when OVERHEAD SUPPLY BECOMES LIMITED!

Linda Piazza : 9/20/2007 12:31:19 PM

Correction to my 12:30:58 post: I still do have some September positions, those cheap time-bomb butterflies that I was trying out as a speculative play and have mentioned at other times. One was set with the body at SPY 148, and the SPY did sit there for a day or two, but the spread never widened enough for that to be profitable (which would have required that the ATM 148 sold calls leak time premium faster than they did). I figure the SPX would have to drop to 148 next week, closer to expiration, to allow for anything anywhere near the maximum profit ($200 minus commissions). I just put on one butterfly at each position, paying $63.86 (commission intensive) for the 148 butterfly and $53.86 for the 143 one. I wanted to see how they played out as the month progressed, never having put on an OTM butterfly and having heard about these on a webinar. The debit amounts to my total risk, so I was okay with testing it this way rather than paper trading it. Although I didn't forget about the positions, I didn't think to mention them in my listing of what am I doing right now because this is just one small step up from paper trading. Anyway, I wanted to be sure to correct that post about what I'm doing now.

Jane Fox : 9/20/2007 12:23:28 PM

WASHINGTON (MarketWatch) - More orders came in the front door and bigger shipments went out the back from factories in the Philadelphia region in September, the Federal Reserve Bank of Philadelphia said Thursday.

The Philly Fed index rose to 10.9 from 0 in August. Readings over zero indicate that more firms were expanding than contracting.

The new orders index improved to 15.1 in September from 7.1 in August. The shipments index rose to 16.9 from 12.4.

The expectations index was essentially unchanged at 35.7.

Inflationary pressures remained. The prices-paid index rose to 23.1 from 15.4, while the prices-received index fell to 3.3 from 6.8. The results show about a third of firms were paying higher prices for inputs, and about 10% were receiving higher prices for their manufactured goods

Jeff Bailey : 9/20/2007 12:22:44 PM

Amex Gold Bugs ($HUI.X) alert! 401.69 +4.71% ... multi-multi-year high!

Linda Piazza : 9/20/2007 12:30:58 PM

In reference to Keene's 11:43:36 post: What am I doing? I'm studying November's options chains, looking for opportunities for bear call spreads if the opportunity presents itself about a week from now to get into some as high up as possible. I'm already out of all September spreads and most October ones, although I still do have an SPX 1620/1630 bear call spread that I'm trying to exit today for $0.15-0.20. No takers yet. I would normally wait until I could exit for $0.05-0.10, keeping more of my original credit, but I'm being extremely cautious about any positions these days. I keep reading some scary things when I'm researching foreign markets, so I'm putting on fewer positions than normal and even fewer bull put spreads that might be hit hard if the markets should roll over. I put on only 15 contracts of bull put spreads for October, and I got out of them this last week, paying back either $0.15 or 0.20 of the credit I collected (don't remember which right now). The lesson of Northern Rock last week should be that if our central banks don't manage this exactly right (and, perhaps even if they do) we're not beyond credit crunch problems. In fact, this week, the BBA LIBOR rate has been causing some real pain, jumping way above the BOE's target rate, finally forcing the unwilling hand of the BOE's governor. While I have no special evidence that we'll still retest summer lows, I still believe that's a strong possibility. I'm not scared. I've taken appropriate steps. I'm not trying to scare you out there, either. I have no special knowledge. However, I do always run various scenarios and decide how I want to weigh my portfolio accordingly. Right now, although I'm itching to get back in and make more money on spreads, I'm feeling like being extra cautious. So, that's what I'm doing.

Linda Piazza : 9/20/2007 12:09:38 PM

Still no new low of the day for the TRAN, but it also hasn't been able to break back above resistance now at about 4865.80-4872.33 on 15-minute closes. It's kind of just wandering around between that resistance and support that is now firming near 4831.24 on 15-minute closes. What it tells us so far is that it's possible for the SPX, OEX and Dow to break down out of those formations that look like bull flags, without guaranteeing that they will do so, especially since the TRAN's action hasn't been able to pull them down out of those formations so far. In fact, the SPX is testing the upper resistance of its flag right now. The TRAN isn't telling us much else at this point, although a new low of the day might tell more.

Linda Piazza : 9/20/2007 11:46:40 AM

USDJPY still dropping. It's now at 114.15. Let's throw out that potential H&S scenario on the 60-minute chart. So far, this drop isn't having too harmful an effect on equities although it's not supportive of big gains, certainly. Even the TRAN hasn't dropped to a new low. Because of all the decisions and Fedspeak both here and in Japan, I haven't been sure whether the usual USDJPY to equities relationship holds this week, which is why I didn't mention it yesterday and expressed some concerns earlier in the week.

Keene Little : 9/20/2007 11:43:36 AM

Looking back at the scare in August and the fact that nothing has really changed.
The market is 1%-2% from all time highs.
Inflation on the rise, dollar in the tank, the consumer slowing, $82 oil, etc.
What would you do with this rally gift?
I would go on CNBC and tell everyone how great things are and SELL, SELL, SELL!!!!!!!!!!!!!!!!!!
Your thoughts ladies and gentlemen of Market Monitor?

My thoughts exactly Barry. You're right--nothing has changed in the credit world and the rally in stocks is a smoke screen for what's happening behind the smoke. One of these days the market will understand that history has not been kind to stock holders when the Fed starts a rate reduction campaign.

The reason they start reducing rates is because they see a credit contraction starting. But their easing of credit terms doesn't fix the problem which has to run its cycle before it gets better. And when it gets better the Fed will start raising rates again and the market will be rallying.

Keene Little : 9/20/2007 11:32:17 AM

Gold has rallied stronger than I thought it would. It looks like the US dollar is headed for the Fib projection at 78.28 where it will have two equal legs down from November 2005 to finish its descending wedge pattern-- Link . The drop in the dollar has certainly given the commodities a boost, oil and gold included. Two equal legs up for gold from its September 2006 low is at 771.40 but the top of a parallel up-channel for price action since 2006 is near 753: Link

The pattern of the rally in gold from September 2006 is a very clear corrective 3-wave move and the triangle b-wave in the middle indicates that the present rally leg is definitely the completion of the corrective pattern and not the start of something bigger to the upside. This is about the clearest EW corrective pattern you'll ever see and it will be followed by a strong decline to below $500 (to create a larger degree 3-wave decline from the May 2006 high).

Linda Piazza : 9/20/2007 11:28:49 AM

USDJPY has still been dropping but it's now reached that next potential support zone, down near 114.30-114.35. It's at 114.36 as I type, but it's been as low as 114.34. It's not low enough yet to unravel that whole potential H&S scenario, but if it gets much lower it will be.

Jeff Bailey : 9/20/2007 11:24:08 AM

11:00 Internals found at this Link

Keene Little : 9/20/2007 11:09:33 AM

Is this going to turn into one of those boring opex Thursdays? We're still flagging and it's still bullish. A break above DOW 13840 would be a signal that the next leg up has started. It takes a strong decline below 13750 to signal something more bearish is unfolding.

Jeff Bailey : 9/20/2007 11:09:19 AM

Could be views as "bullish" for LIBOR rate.

Jeff Bailey : 9/20/2007 11:08:49 AM

13-week Treasury Yield ($IRX.X) ... "plunging" 23 bp to 3.580% ...

Linda Piazza : 9/20/2007 11:03:57 AM

The USDJPY is breaking slightly below the neckline of that potential H&S and is dipping toward the next 114.30-114.35 support zone. The USDJPY is at 114.54 as I type.

Jeff Bailey : 9/20/2007 11:03:39 AM

11:00 Market Watch found at this Link

Keene Little : 9/20/2007 10:55:57 AM

How safe are treasuries??? I mean the face value of them at expiration? Can the government go bankrupt or refuse to pay the face value or will they print you some worthless money no matter what??

Marie, if the US government reaches the point where they won't be able to pay the face value of its bonds we will have far more significant problems than you getting your cash back. Let's just say that would be an indication of true financial Armageddon (not Jim Cramer's version) and while I may be bearish the economy over the next couple of years I am in no way that bearish. The US government paper will continue to be one of safest investments in the world for a very long time.

Linda Piazza : 9/20/2007 10:46:04 AM

USDJPY bouncing from that neckline now, but it's not bouncing very hard just yet. Just keep that scenario from my 10:34 post in mind this morning. Actually, it fits somewhat with the potential sideways-to-sideways-up consolidation that we sometimes see after a big run-up such as that we had.

I'm more uncertain than usual that the technicals we're seeing set up will play out, though. Today is the Thursday before opex week, and those have sometimes been just crazy for a while. So always be aware of the possibility of some craziness breaking out (or breaking down?) today.

Jeff Bailey : 9/20/2007 10:41:30 AM

Swing trade bullish call alert! for one (1) of the GoldCorp GG Jan $32.50 Calls (GG-AZ) at the offer of $1.95.

GG $30.21 +4.20% ... No stop for now. Raising target to $38.00.

Linda Piazza : 9/20/2007 10:34:36 AM

There's the potential for the USDJPY to form a H&S on its 60-minute chart. If so, let's start thinking about the scenario that would play out and what it could mean for equities: Link The USDJPY dropped to the neckline while I was typing.

Keene Little : 9/20/2007 10:27:54 AM

Price has pretty much stalled here and so far the pullback continues to look like a bull flag from yesterday's highs. Without a stronger selloff that breaks below the bottoms of the flags it will look more like a bullish consolidation. But a drop out the bottom of the flags would likely be accompanied by strong selling. So we need to see how this resolves.

Tab Gilles : 9/20/2007 10:26:42 AM

Google (GOOG) Resting highs, follow up to yesterday's post (9:28 AM) Link Link Link Link

Jeff Bailey : 9/20/2007 10:22:50 AM

Swing trade call exit alert! for the GoldCorp GG Jan $25 Call (GG-AE) at the bid of $6.10.

GG $30.07 +3.83%

Linda Piazza : 9/20/2007 10:23:24 AM

While the TRAN broke down out of the little bull-flag-looking formation that had been showing up on 15-minute charts on the Dow, SPX and OEX as well as the TRAN, none of those others broke down. They just moved down within those flag-like formations. Their actions show why it's dangerous to assume that a reversal will take place just because a potential reversal signal is in place, as happened after yesterday's daily candle, and why it's dangerous to act on any signal such as that the TRAN was giving this morning, before price action confirms. The SPX, Dow and OEX may yet follow the TRAN in breaking down out of what had looked like bull flags, and that's the purpose of watching the TRAN, to begin setting up a possible scenario.

So, what's the TRAN doing now? It's come up to test the breakdown level out of its bull flag as well as Keltner resistance now near 4871-4872 on 15-minute closes. The TRAN is at 4861.03 as I type. No conclusion yet as to whether this retest will result in a rollover or a oh-I-didn't-really-mean-to-break-down move back into the flag and to new highs.

Jane Fox : 9/20/2007 10:17:21 AM

And BTW AD line is a very neutral -299 so although the bulls have the ball they do not have field position.

Jane Fox : 9/20/2007 10:15:06 AM

Ok I have the VIX making new daily lows (bullish), the AD volume making new daily highs (bullish), the AD ratio making new daily highs (bullish), the DAX testing daily highs (bullish) but then I have the USDJPY currency pair almost to daily lows (bearish).

Jeff Bailey : 9/20/2007 10:06:51 AM

AT&T (T) $42.00 +1.0% ... That's a new 52-weeker. #22 weighted component in the Dow Industrials.

Jeff Bailey : 9/20/2007 10:04:33 AM

10:00 Market Watch found at this Link

Tab Gilles : 9/20/2007 10:00:41 AM

Weekly EIA Report Link

Linda Piazza : 9/20/2007 10:00:43 AM

The TRAN is bouncing now from support near 4820. Bears want to see resistance near 4855 or near 4872-4878 hold. Bulls don't, of course. The TRAN is at 4834.98 as I type.

Linda Piazza : 9/20/2007 9:54:37 AM

The TRAN is attempting to slow its descent as it drops into potential support, including Thursday's swing high, but we're going to have to see if it holds. Meanwhile, the USDJPY is still sinking toward 114.74-114.83 potential support, with next support below that at the bottom of a gap from last week, near 114.30-114.35. It's at 114.98 as I type. Both still support a bearish tenor but these approaches to potential support should be watched.

Jane Fox : 9/20/2007 9:49:51 AM

The Russell 2000 futures have breached its overnight lows. So much for support there - let's see if the large caps can do a better job.

Linda Piazza : 9/20/2007 9:47:08 AM

The Fed has just announced another repo this morning, this one in the amount of $19.000 billion. As per the calculations in my 8:37:57 post this morning, that leaves a net drain of $1.750 billion for today. So far, the Fed has added $26.000 billion to replace repos maturing today.

Keene Little : 9/20/2007 9:46:16 AM

The RUT's pattern looks more impulsive to the downside but if the current leg down reverses back up and takes out yesterday afternoon's high near 818 then it will turn out to be just a 3-wave pullback. But if the decline continues and drops back below 800 then that too would be an indication we've seen the high.

Keene Little : 9/20/2007 9:44:44 AM

While a new low below yesterday afternoon's lows could be just another leg down in a larger corrective pullback (a reason to stay cautious in a short play) it begins to look like too big a correction as compared to the one on Tuesday morning. This is a subjective evaluation of the wave pattern and at this time is only a heads up that we may have seen the high for the correction to the July-Aug decline. For now if you're short you should have your stop just above yesterday afternoon's bounce high.

Linda Piazza : 9/20/2007 9:44:17 AM

Big drop this morning on the TRAN. It's dropping back toward support gathered in the 4825 and then 4796.48-4844.27 zones. It's at 4823.44 as I type. This zone here and just below should be watched for potential support, as guidance to what might happen with the SPX, OEX and Dow.

As noted last night in the Wrap, the greatest expectation, in normal times, for today would have been for a pullback or else sideways trading while rising trendline and MA support caught up. These aren't normal times, but we should still have kept this scenario in mind. If it's going to be the sideways trading version, though, that means that early drops could get reversed, so watch for signs that might happen. The TRAN might give you a heads up.

Jane Fox : 9/20/2007 9:41:27 AM

Overnight lows have not yet been breached and I suspect will be support today at least for awhile. Link

Linda Piazza : 9/20/2007 9:38:21 AM

No gap lower on the Nasdaq. Here's my chart from last night's Wrap showing why that's important: Link

Keene Little : 9/20/2007 9:37:32 AM

As per my comments last night for SPX and DOW cash vs. futures wave patterns, I'm watching to see if yesterday afternoon's lows get taken out.

Jane Fox : 9/20/2007 9:33:07 AM

AD line is a very neutral -200

Jane Fox : 9/20/2007 9:10:25 AM

DAteline WSJ - The financial system remains in a "relatively strong position," despite the recent turbulence in financial markets, Federal Reserve Chairman Ben Bernanke said Thursday.

In the recent "episode, the shift in risk attitudes combined with greater credit risk and uncertainty about how to value those risks has created significant market stress," Mr. Bernanke said in prepared testimony to be delivered before the House Financial Services Committee.

"On the positive side of the ledger, past efforts to strengthen capital positions and financial market infrastructure places the global financial system in a relatively strong position to work through this process," he added.

Mr. Bernanke noted however that during the recent turbulence in markets, "global financial losses have far exceeded even the most pessimistic estimates of the credit losses on these loans."

Mr. Bernanke listed off the various moves the Fed has taken to relieve the recent strains, including the reduction in the discount rate, the cut in the fee charged for lending Treasurys securities and this week's surprise move to cut the benchmark federal funds target rate by 50 basis points.

"Recent developments in financial markets have increased the uncertainty surrounding the economic outlook," he said, adding that the Federal Open Market Committee "will act as needed to foster price stability and sustainable economic growth."

Jane Fox : 9/20/2007 9:07:19 AM

I have been a Goldbug for a long time but I took my focus off Gold while we were have the mini meltdown in the equity market and missed this run up. Link

Jane Fox : 9/20/2007 9:04:56 AM

Here is a chart of the US $, new yearly lows. Link

Jane Fox : 9/20/2007 9:02:45 AM

We traded in a narrow range yesterday so a narrow range overnight was to expected. The DOW is testing its overnight highs as I type though. Link

Jane Fox : 9/20/2007 8:56:56 AM

WASHINGTON (MarketWatch) -- In an indication that layoffs haven't increased significantly, the number of U.S. workers filing for unemployment benefits fell by 9,000 last week to a seven-week low of 311,000, the Labor Department reported Thursday.

Jane Fox : 9/20/2007 8:54:10 AM

Raising lenders' underwriting practices important: Bernanke

Fed working with groups to reduce foreclosure risk: Bernanke

Market for subprime-mortgages has adjusted sharply: Bernanke

Markets 'tend to self-correct,' Bernanke says

Foreclosures, delinquencies to rise further, Bernanke says

Jane Fox : 9/20/2007 8:52:26 AM

NEW YORK (MarketWatch) -- Gold futures rose sharply early Thursday, buoyed by the dollar's fall to a new all-time low against the euro. Gold for December delivery advanced $8.50, or 1.2%, at $738 an ounce on the New York Mercantile Exchange.

"Gold prices have risen further, as the dollar fell below 1.40 against the euro and oil prices remain high," said analysts at Action Economics. "A weakening dollar makes gold more attractive for holders of other currencies and as a hedge against inflation."

Jane Fox : 9/20/2007 8:51:27 AM

NEW YORK (MarketWatch) -- Goldman Sachs Group's third-quarter profit rose 79%, driven by a one-time investment gain and significantly higher mortgage trading revenue, financial results showed Thursday.

The company (GS) said it earned $2.85 billion, or $6.13 a share, in the three months ended Aug. 31, compared to $1.59 billion, or $3.26 a share, in the third quarter a year ago.

Total net revenue rose 63%, to $12.33 billion from $7.58 billion a year ago. Total net revenue is revenue minus interest expenses.

Jane Fox : 9/20/2007 8:50:16 AM

Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson testify in front of the House Financial Services Committee on mortgage markets today.

Linda Piazza : 9/20/2007 8:46:29 AM

The USDJPY fell sharply from Tuesday's late-day high of 116.35 into the 7:45 low this morning of 114.95. It's now bouncing from a potential support line near 115.00, but one chart shows the possibility of a further dip, toward 114.76-114.85.

Linda Piazza : 9/20/2007 8:40:40 AM

As per my Wrap last night, Nasdaq bulls do not want to see a gap lower this morning. That isolates yesterday's doji, and makes more likely the bearish significance of that doji with an opening level that gapped above Tuesday's close. In this environment, use caution in your conclusions, because it still doesn't signify that the potential reversal signal is confirmed. It only makes it look more likely.

Linda Piazza : 9/20/2007 8:37:57 AM

The Fed has the following repos maturing today: A $9.750 billion repo from yesterday, an $11.000 billion repo from September 13, and a $7.000 billion from September 6. The Fed has already announced a $7.000 billion repo this morning. By my calculation, that still leaves a hefty $20.750 billion drain. We'll see what the Fed does at its more typical 9:40 announcement.

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