Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
Jeff Bailey : 10/4/2007 12:29:12 AM

Swing trade put raise target alert! ... for the iShares Russell 2000 IWM Oct. $78 Put (IOW-VZ) to $79.25 in the underlying (up from $79.00)

Jeff Bailey : 10/4/2007 12:12:04 AM

SMH (email additional) ... Here's a 10-minute interval chart of the SMH. QCharts' daily/weekly Pivot Levels turned on. I've added MONTHLY Pivot retracement. Link

Maybe see some "inventory management" from computers. See the DAILY R2 trade on Friday, then DAILY S1 trade same day?

Now see a WEEKLY R2 on Monday, and WEEKLY S1 same week?

R2 ... S1.

Jeff Bailey : 10/3/2007 11:38:40 PM

Email Question: ... It looks like the SMH is forming a H&S pattern over the past few months on the daily chart. Your comments would be appreciated. Also, I purchased 200 SMH $40 Oct puts on Monday and sold this morning when the SMH started to bounce after the large gap down. Nice profit but the SMH then turned back down and is much lower now. Wondering where you would have had your stop on this trade today? Thanks

Jeff's Reply:On 20,000 shares equivalent (20,000 * $40 = $800,000.00), target(s) may have been WEEKLY Pivot $38.33 and WEEKLY S1/MONTHLY Pivot overlap ($37.93/$38.07) especially with it looking as if Micron (MU) was the catalyst for weakness. That is, "just" one stock that is more of a commodity stock (DRAM is more of a commodity these days).

Perhaps "leg out" of 10,000 contracts at WEEKLY Pivot, get a profit under your belt, then go for the next target of WEEKLY S1.

Often times, on the "gap" (up/down) we see a spike in volatility, or premium, and option traders WANT to sell (naked, or long) that premium, so as I've demonstrated here in the MM when we have multiple contracts, if we get a SPIKE in the direction we're trading, I'll sell a PORTION of the position (based on a $10,000 cash account for MM Profiles, not $8,000,000.00). $800,000.00 equivalent if "full position" based on prudent man rule would be $8,000,000.00 account.

If you can get a WEEKLY S1 when the major equity indexes are ABOVE their WEEKLY Pivots and MONTHLY Pivots, that's a VERY good place to look for stronger support and bulk of buyers.

After a trade at WEEKLY Pivot, I probably would have lowered stop on rest (after closing 10,000 at WKLY Pivot) to WKLY R1.

Then as trade unfolded to WKLY S1, lower stop to just above WKLY Pivot, or take additional 5,000 contracts off table, and hold the remaining 5,000.

Again ... traders that trade multiple contract positions, can LEG OUT of trades.

Institutional traders DO NOT do the "one and done" entry/exit.

As for the H/S pattern on the daily interval chart. I wouldn't be "worrying" about that with October expiration.

I'm showing the SMH-VH traded a high/low of $2.16/$1.63, so a $0.53 range.

SMH traded a high/low of $38.52/$37.80.

Keene Little : 10/3/2007 11:16:39 PM

Thursday's pivot tables: Link and Link

The various indices are pretty much in agreement but unfortunately none of them are giving any clear signals yet. It looks like a corrective pullback this week which should lead to another rally leg (depicted with the pink wave counts). But any quick breakdown from what looks like bull flag consolidations would be bearish and would suggest Monday's highs will stand. We may not get our answer until Friday.
DOW: Link
SPX: Link
NDX: Link
RUT: Link

Jeff Bailey : 10/3/2007 10:18:20 PM

Nikkei-225 ($NIKK) Link ... after making a bold move above trend, $NIKK off 86 points, or -0.50% at 17,113.

High/Low has been 17,160/17,067.

Jeff Bailey : 10/3/2007 10:16:09 PM

Not even close! ... RUT.X NH/NL came in at 54:13 (per 04:28:39)

OI Technical Staff : 10/3/2007 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 : 10/3/2007 9:59:40 PM

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

Jeff Bailey : 10/3/2007 9:54:17 PM

Closing Internals found at this Link

Jeff Bailey : 10/3/2007 9:42:58 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 10/3/2007 4:43:11 PM

Select Financial SPRDs (AMEX:XLF) $35.29 -0.22% Link ... Here's some work with benchmarks of recent short interest data.

SI at 05/15/07 was just 34.42 million. But "somebody" smelled something a month later at almost identical price when SI built to 51.39M.

Convictions grew by 7/13/07 with SI building to 66.8M.

Just one month later, SI surged to 136.16M.

Now "somebody's" been covering as SI tapers off to 97.87M.

Jeff Bailey : 10/3/2007 4:28:39 PM

UltraShort Russell 2000 (AMEX:TWM) $62.06 +0.22% ... Need at least 47 new lows tonight.

Jeff Bailey : 10/3/2007 4:26:32 PM

Mmm, mmm, mmm ... "doji" close for the IWM. Financials really looking to shape up. Maybe too much.

Keene Little : 10/3/2007 4:12:08 PM

It looks like the SMH is forming a H&S pattern over the past few months on the daily chart. Your comments would be appreciated. Also, I purchased 200 SMH $40 Oct puts on Monday and sold this morning when the SMH started to bounce after the large gap down. Nice profit but the SMH then turned back down and is much lower now. Wondering where you would have had your stop on this trade today? Thanks.

First question: did you make money on your put play? Yes? Then you should never have seller's remorse. That's a lot easier said than done but it's a fact that you will grow your account much more profitably by taking small wins repeatedly than going for the home run (trust me on this one). You'll never go broke taking a profit.

You're right about what looks like a H&S pattern developing since the May 2006 left shoulder and July head. It looks to be in the right shoulder since the August low. A break of the August low would give it a price objective near 29 (neckline is at 35 and currently trading a little over 38). The bearish divergences at the head and right shoulder support the bearish interpretation of what's developing here.

As to your trade, nice one. We've seen many gaps to the downside get reversed quickly so taking a quick profit was a great trade. A way you could have played it would have been to place your stop at the bottom of the gap which was this morning's opening price. Notice that's where the bounce failed this morning. But don't kick yourself--you done good.

Jeff Bailey : 10/3/2007 4:04:20 PM

WHITE HOUSE URGES TEMPORARY MORTGAGE TAX BREAK

DJ- White House gives its support to a bill that would give tax relief to troubled U.S. homeowners who rework their mortgages, but says the tax break should be a temporary response to the housing sector's current woes.

Jane Fox : 10/3/2007 3:59:46 PM

Economic reports for tomorrow include:

8:30a.m. Initial Jobless Claims. Expected: +14K. Previous: -15K.

10:00a.m. August Factory Orders. Expected: -2.4%. Previous: +3.7%.

Keene Little : 10/3/2007 3:59:28 PM

Nice end-of-day save. Someone doesn't want to see this market sell off into the close. Pretty choppy day which continues to leave us wondering what's next. These are good days to read/study/research/twiddle your thumbs/do-anything-but-trade.

Linda Piazza : 10/3/2007 3:54:36 PM

I notice that the euro has been dropping heavily in relationship to the USD over the last few days. Could it be that some currency traders don't believe the prediction (according to one source, at least) that the ECB will leave rates steady and expect the ECB to lower rates instead? I don't have a clue. This could be just a technical move, a pullback after recent gains. I'm just wondering what's going on with currencies.

Jeff Bailey : 10/3/2007 3:51:47 PM

Some positive news for a change. "As bad as everyone says things are ..."

Jeff Bailey : 10/3/2007 3:51:17 PM

HEADWAY MADE TO END NORTH KOREA'S NUCLEAR AMBITIONS

DJ- By the end of the year North Korea will disable the nuclear power plant near Yongbyon that is its chief source of enriched plutonium, a key ingredient in nuclear bombs. It also will provide details about its entire nuclear weapons program.

Jeff Bailey : 10/3/2007 3:37:41 PM

Thanks Linda! (02:43:29) ...

Linda Piazza : 10/3/2007 3:32:44 PM

What's happening tonight and early tomorrow morning that might impact your trades? Lots. The Bank of England and ECB both have rate decisions early tomorrow morning. What do they have to do with us? Just imagine how closely those hoping for a rate reduction here will be watching the decisions and the statements accompanying them, for one thing. Currency pairs will be impacted. In particular, the euro/yen pair might be impacted, and that's something that's involved in the yen carry trade, too, as well as the euro/dollar with how our multinational companies perform.

Linda Piazza : 10/3/2007 3:26:12 PM

It's not too early to begin thinking about end-of-day decisions. The scenario for the SPX--sideways consolidation for a few days as a prelude to a dip to the 10-sma to recharge--has so far played out. What about tomorrow, then? If this scenario continues to play out, tomorrow could be another day much like today or it could be the day the SPX dips to the 10-sma. The spring off today's low, if that holds into the close, suggests that tomorrow might be one of up consolidation days, though, a day that results in a small-bodied green candle. That's what it looks like if the SPX maintains current or higher prices in to the close. If it closes nearer the low of the day, things look a little different, although the several-day scenario would still appear intact.

There's no guarantee of what will happen. There never is. However, having a scenario in mind this morning allowed us to ascertain that the early dip, as strong as it appeared at the time, might not lead to a cascading-lower day, and that support might be found, and was found, where Keltners and other support levels suggested it would be. That allowed those who were aware of the scenario to take quick bearish profits and even provided a do-over later in the day.

I haven't been thinking short-term longs were the way to go because my several-day scenario calls for a possible dip to the 10-sma or at least approach to that. When I was daytrading, I thought special care needed to be exercised with countertrend trades. Now, if you're in short-term bullish positions, you have to consider whether you want to hold overnight, given a possible eventual test of the 10-sma. You short-term bears need to consider whether you can weather an up day tomorrow within the context of ongoing consolidation.

Really, hasn't it been miserable being in any short-term trade, though, unless one has quick reflexes? Being aware of the scenario that might play out might have allowed some of you to avoid these choppy trading days at all, which might have been a good idea.

Jeff Bailey : 10/3/2007 3:21:27 PM

03:00 Internals found at this Link

Tab Gilles : 10/3/2007 3:06:47 PM

Weekly EIA Report: Link

Keene Little : 10/3/2007 3:04:28 PM

There is one EW count that I'm considering and it's important enough to mention here because the count says Monday's high was the end of the rally. As I had mentioned yesterday, I really like the upside target of SPX 1563 for a finish but I don't want to get blind sided by a stealth decline that suddenly turns into something worse. We've seen strong selloffs start exactly the way this week's selling has started.

I can easily count the rally from the August low as a succession of 3-wave moves and if that's the correct count then it's an ending pattern (ascending wedge) and Monday's high would have completed the 5th wave as a 3-wave move up from Sept 25th: Link

The key level for this count is the 1507 low on Sept 25th but a heads up would be a break below 1522 on Sept 28th. Based on this potential wave count I am not convinced we're going to see an upside resolution out of this week's pullback. Short term trades are called for until we see whether this will resolve to the upside (hopefully to 1563) or break down instead.

Jane Fox : 10/3/2007 3:03:32 PM

Here is another interesting setup on long bond. Daily/120 minute/60 minute has turned red so you are looking for the 120/60 minute to turn back green before taking a short term long position. Notice how the 60 has turned back green a couple of times but the 120 has not keeping you from getting in too soon. Link

Jeff Bailey : 10/3/2007 3:03:12 PM

03:00 Market Watch found at this Link

Jane Fox : 10/3/2007 2:58:08 PM

Here is an interesting setup. The Crude jtHMA charts show the daily has turned red so if the 120 minute and the 60 minute turn red then back green we have a buy. Link

Jeff Bailey : 10/3/2007 2:49:58 PM

SPY session low has been $153.45. "Bad tick" to $153.01 in US Market Watch.

Jeff Bailey : 10/3/2007 2:48:55 PM

Daily/WEEKLY/MONTHLY Index Pivot Matrix (yellow are today's action) Link

Jane Fox : 10/3/2007 2:43:32 PM

NEW YORK (MarketWatch) -- Gold futures finished marginally lower Wednesday, coming under pressure after the dollar rose against other major currencies.

Gold for December delivery ended down 60 cents at $735.70 an ounce on the New York Mercantile Exchange.

"The short-term direction for gold is likely to depend heavily on the dollar, with the yellow metal still looking quite vulnerable to further profit-taking," said James Moore, metals analyst at TheBullionDesk.com.

Linda Piazza : 10/3/2007 2:43:29 PM

MU had earnings yesterday, Jeff. I happened to be looking for a company with earnings this week for the purposes of a Trader's Corner article I'm doing this weekend (on why the spread between historical and implied volatility going into earnings may mean that a cheap pre-earnings straddle might not be a good idea after all), so that's why I happened to know it off the top of my head. There was a sell-the-report reaction, just a bit.

Jeff Bailey : 10/3/2007 2:35:28 PM

Micron Tech (MU) $10.76 -8.73% ... looks to be the driver. #1 most active at the big board.

Jeff Bailey : 10/3/2007 2:34:16 PM

Will also note SMH $37.92 -2.66% ... MONTHLY Pivot $38.07 has been traded.

Linda Piazza : 10/3/2007 2:33:57 PM

I'm looking again at the TRAN's daily chart, seeing that it's dropped all the way from a resistance zone to a support one, both composed mostly of moving-averages that are converging. Link

Jeff Bailey : 10/3/2007 2:27:02 PM

Semiconductor HOLDRs (SMH) $37.95 -2.59% ... after kiss of WEEKLY S1.

Keene Little : 10/3/2007 2:25:31 PM

SPX is trying to hold onto its uptrend line from Sept 10th at 1538. As long as it holds this is another opportunity to test the long side. The overall pattern of the pullback from Monday sill looks like a correction and should lead to another rally leg so keep testing the long side for now until we get some better evidence of a trend change.

Jeff Bailey : 10/3/2007 2:20:30 PM

4 bull/1 bear on SPX?

Jeff Bailey : 10/3/2007 2:19:40 PM

Jane! Is that 3 bull/2 bear on the INDU?

Linda Piazza : 10/3/2007 2:08:37 PM

You've got a tough decision to make if you were in a short-term bearish SPX position earlier today and you didn't take profits when the SPX tested the Keltner support that I was mentioning, saying that it was likely to prompt a bounce attempt. Now the SPX is back at that same Keltner configuration. I can't tell you what's going to happen next, but I can tell you this is potential support. It may give way and it may result in a stronger bounce. That's what we're waiting to see, but you've been given a "re-do" here, so decide what you want to do about it.

Jane Fox : 10/3/2007 2:07:57 PM

And the SPX jtHMA charts. Link

Jane Fox : 10/3/2007 2:04:17 PM

Here are the DOW jtHMA charts. Link

Jane Fox : 10/3/2007 2:02:21 PM

Here are the jtHMA charts for the Russell 2000. A long term buy is when the monthly charts are Green and the weekly turns from red to green. The short term buys come from the daily turning red (a dip) and then the 120 and 60 minute turning back green (confirmation the dip is bottoming). Link

Linda Piazza : 10/3/2007 1:58:00 PM

The SPX turns down toward 1547-1547.40 potential support on 15-minute closes. SPX at 1538.57 as I type.

Jane Fox : 10/3/2007 1:57:27 PM

The Dow and S&P are both below their PDLs and the NDX is right behind and tagging those lows as I type. Link

Jane Fox : 10/3/2007 1:54:08 PM

I think the Wilshire 5000 will (should) return to at least its lower trendline at around 15200 before it assaults its yearly highs. Link

Jeff Bailey : 10/3/2007 1:53:27 PM

FOOD PRICES SEEN HURT BY OIL PRICES, WEATHER

DJ- Acting USDA Secretary Chuck Conner says ethanol producers are getting too much of the blame for increasing food prices, which are expected to jump between 3.5% and 4.5% this year, saying weather and rising oil prices are having a greater impact.

Jeff Bailey : 10/3/2007 1:50:37 PM

BP DOWN AMID OFF-THE-RECORD GUIDANCE RUMOR

DJ- Shares fall 1.5% amid a market rumor that BP had given off-the-record guidance to analysts on its oil and gas output. But the oil major says it didn't provide information to analysts that wasn't already publicly available.

BP PLC (BP) $67.68 -1.54% ...

Jeff Bailey : 10/3/2007 1:48:51 PM

IWM $82.30 -0.31% ...

Jeff Bailey : 10/3/2007 1:48:05 PM

Disclosure: I currently hold bearish position in a RUT.X indexed security.

Jeff Bailey : 10/3/2007 1:47:19 PM

Bearish swing trade long alert! ... for 1/2 position in the UltraShort Russell 2000 (AMEX:TWM) at the offer of $62.28. Stop goes $61.00. Target $65.45.

Jeff Bailey : 10/3/2007 1:40:31 PM

CRUDE INVENTORIES RISE, GASOLINE SUPPLY FALLS

DJ- U.S. crude inventories rise by 1.2 million barrels to 321.8 million barrels in the week ended Sept. 28, surprising analysts who expected a 400,000-barrel withdraw. Gasoline stockpiles fall 100,000 barrels and distillate stockpiles slip by 1.2 million barrels.

Jeff Bailey : 10/3/2007 1:39:37 PM

ADP SEES SEPTEMBER PAYROLLS UP 58,000

DJ- Automatic Data Processing and Macroeconomic Advisers report an increase of 58,000 in private jobs in September, well below the expected 100,000 increase in total jobs that economists called for in a Friday's payroll report.

ADP $47.37 +0.65% (see also 12:47:49)

Jeff Bailey : 10/3/2007 1:37:56 PM

DEUTSCHE BANK UP, TO BOOK $3.09B IN CHARGES

DJ- German bank says it will book about $3.09 billion in charges on leveraged loans, loan commitments, structured credit products and residential mortgage-backed securities. But shares up 1.5%% after firm adds that 3Q net profit will still exceed the year-earlier figure, helped by tax credits and capital gains.

DB $134.53 +1.63% ...

Linda Piazza : 10/3/2007 1:23:22 PM

If there's not a bounce from the 1540-ish level, the next SPX Keltner support on the 15-minute chart is at 1537.35-1537.50 on 15-minute closes.

Jeff Bailey : 10/3/2007 1:21:34 PM

01:00 Internals found at this Link

Keene Little : 10/3/2007 1:13:08 PM

It looks like the choppy consolidation will continue. If the market chops its way lower into Friday's job report then it would set us up for a rally on Friday. But too early to tell on that since it's possible we'll chop higher instead. The operative word right now is chop and therefore not a great trading environment. Keep your powder dry for another day.

Jeff Bailey : 10/3/2007 1:03:22 PM

01:00 Market Watch found at this Link

Jeff Bailey : 10/3/2007 12:47:49 PM

DJ Survey: US Jobless Claims Seen Up 12,000 Sep 29

Jobless claims are expected to have rebounded in the latest week.

The median estimate of 15 economists surveyed Monday by Dow Jones Newswires is for jobless claims to have increased 12,000 to 310,000 in the week ended Sept. 29.

The Labor Department is due to release the jobless claims data at 8:30 a.m. EDT (1230 GMT) on Thursday.

Assuming that the forecast is correct and if there are no revisions, the four-week moving average for jobless claims would decrease to 310,250 from 311,500.

Jeff Bailey : 10/3/2007 12:45:27 PM

DJ- Venezuela's Black Market Dollar Hits Historic High

Keene Little : 10/3/2007 12:38:28 PM

It's a battle between the trend lines. The DOW is back down to its uptrend line from Sept 10th.

Jeff Bailey : 10/3/2007 12:31:59 PM

SPX +15.65% for 52-weeks.

RUT.X +15.61%

Linda Piazza : 10/3/2007 12:30:24 PM

I return to find the SPX right about where it was when I left, having bounced up from the day's low. At the time I left, support was looking stronger than resistance, and I had thought a test of 1546 was looking possible (11:06:38 post). So far, the SPX has bounced up to a high of 1545.84, not quite hitting 1546, but I guess "testing" it. What now? Support may remain slightly stronger than resistance, but that's really stretching things. In reality, on a 15-minute Keltner chart, the SPX just looks kind of hanging out there in the middle of space, hanging onto 1543.70 and then 1542.30 support on 15-minute closes, but with other support and resistance spaced far enough apart that there's nothing much to be predicted from that chart. Not at this moment. This is to be expected on this kind of day.

Jeff Bailey : 10/3/2007 12:30:20 PM

Insurance Bullish % (BPINSU) was in column of X at 62.00% on chart (62.50% actual). It would currently take a 76% measure to achieve "bull confirmed" status and a reversing lower measure of 56% to reverse back to "bear confirmed."

In early August, fell to 36%.

Jeff Bailey : 10/3/2007 12:25:46 PM

American Intl. Group (AIG) $69.02 +0.10% Link ... #9 most heavily weighted Dow component, #3 weighting in XLF.

Today's trade at $69.00 eases concern of the "bull trap."

The "bull trap" is a PnF pattern where a security gives a triple top buy signal in a "bear phase" market.

Keene Little : 10/3/2007 12:28:15 PM

Didn't get the break above the downtrend line and now with the slightly deeper pullback it's looking like we could still be stuck in a larger consolidation off Monday's high. That might be a bit of an early call here but unless it rallies up to a new daily high right now then we could see the market chop its way lower for another day or so.

Keene Little : 10/3/2007 12:02:48 PM

The DOW is consolidating underneath its downtrend line so there's a good chance we'll see a move higher and break it. By doing that it will create a small 5-wave move up and require a correction. That would mean a drop back down to retest the broken uptrend line would set up another long play. But first let's see if that resistance line can be broken.

Jane Fox : 10/3/2007 12:04:04 PM

It is not looking like the SPX is going to retrace as much as I think is necessary for it to break its yearly highs. If it tags yearly highs from here there is a very good chance that resistance will not break and we may see the deeper SPX retracement from there. Link

Jane Fox : 10/3/2007 11:55:36 AM

HMMM do you think the Russell 2000 has found support? Link

Jane Fox : 10/3/2007 11:54:46 AM

Internals have turned much more bullish now but remember the AD line and volume are still below 0.

Jeff Bailey : 10/3/2007 11:51:18 AM

MBA's Weekly Application Survey (correct) found at this Link

Tab Gilles : 10/3/2007 11:45:06 AM

Charts for SHLD Posted 10/3/2007 11:30:32 AM

Daily: Link

Weekly: Link

PnF: Link

Keene Little : 10/3/2007 11:44:37 AM

The DOW just hit its downtrend line from Monday so this would be a typical place to try the short side and see what develops.

Keene Little : 10/3/2007 11:32:55 AM

The downtrend line from Monday for SPX is just above 1546. If we're in a larger correction then that will likely be resistance and offer a scalp short if you're interested. A break above it should signal the pullback is finished. So far that level has not been tested.

Tab Gilles : 10/3/2007 11:30:32 AM

Sears Holding (SHLD) Nice move so far in October. Up 13% from a low of $125 to now trading at $141.23 +$5.25 (3.84%) today alone.

Several Call options to take a look at: Dec. 145 (KTQLV), Jan 150 (KTQAU), March 155 (KDUCK)

Taking a look at the Daily, Weekly , and PnF chart see substantial upside. Link Link Link

Jeff Bailey : 10/3/2007 11:23:24 AM

Bank of America (BAC) $51.96 +0.46% ... #2 weighted XLF components. Today's trade at $52.00 does see a 3-box reversal higher. Alerts set at $53 and $48.

Jeff Bailey : 10/3/2007 11:17:54 AM

There's a lot of things people didn't see coming.

Jeff Bailey : 10/3/2007 11:17:31 AM

S&P Banks (BIX.X) $374.07 +0.91% ...

Jeff Bailey : 10/3/2007 11:17:08 AM

Google (GOOG) $585.50 +0.18% ...

Jeff Bailey : 10/3/2007 11:16:41 AM

CME Group (CME> $612.01 +1.50% ...

Jeff Bailey : 10/3/2007 11:14:45 AM

11:00 Internals found at this Link

Linda Piazza : 10/3/2007 11:10:01 AM

I did want to mention approaching resistance (72-ema) on the USDJPY's daily chart, with that at 117.23. Stronger resistance (historical, 50% Fib retracement of the steep decline this summer) lies at about 117.80.

Linda Piazza : 10/3/2007 11:08:49 AM

I have to leave for an appointment this morning. I wanted to note before I left that the USDJPY is now at 116.64, in breakout mode on the 15-minute Keltner channel chart as well as on the 30-minute version. As long as it maintains 30-minute closes above about 116.40, it's still in breakout mode on both charts, and those figures should be good until my return unless there's a big move.

Linda Piazza : 10/3/2007 11:06:38 AM

Instead of turning down toward support again, the SPX closed the last 15-minute period above the Keltner 1541.70-1541.80 zone. As I said earlier, we never could count on big declines and, after the first support test, it became more difficult to figure out what would come next. Right now, as long as the 1541.70-1541.80 zone holds on 15-minute closes, near-term support is now looking a bit stronger than near-term resistance, which may mean a test of 1546 is possible. I just wouldn't count on anything from this point on, however, as I noted earlier. If this is to be a choppy consolidation type day of the type the SPX often produces at this point in its reestablished pattern, then it's going to be . . . a choppy consolidation type day.

Keene Little : 10/3/2007 11:04:25 AM

Greenspan thinks the worst of the subprime mess is over. This from the man who didn't even see it coming. He should go into hiding and leave us alone. I suspect he will be eating those words very shortly.

Jeff Bailey : 10/3/2007 11:03:05 AM

11:00 Market Watch found at this Link

Keene Little : 10/3/2007 11:02:23 AM

With new daily highs now pull your stop up to just below the recent dip at 10:45. If it drops back below that level from here then it will leave just a 3-wave bounce and you don't want to be long in that case.

Jeff Bailey : 10/3/2007 10:59:03 AM

Swing trade call alert! ... for one (1) of the F5 Network FFIV Jan $40 Calls (FLK-AH) at the offer of $4.60.

FFIV $$39.91 +1.21%.

No stop for now. Target $48.

Jeff Bailey : 10/3/2007 10:57:13 AM

Countrywide (CFC) $20.32 +0.14% ...

Jeff Bailey : 10/3/2007 10:56:45 AM

Citigroup (C) $48.03 +0.35% ...

Jeff Bailey : 10/3/2007 10:56:19 AM

Select Financial SPDRs (AMEX:XLF) $35.42 +0.14% ...

Jeff Bailey : 10/3/2007 10:55:46 AM

BIX.X 373.46 +0.75% ...

Jeff Bailey : 10/3/2007 10:55:27 AM

Greenspan: The Worst Of the US Subprime Crisis Is Over

Linda Piazza : 10/3/2007 10:46:32 AM

This morning, the RUT erased its breakout mode on the 30-minute Keltner chart, with that outer channel line at 829.10 now potential resistance on 30-minute closes. The RUT has not, however, erased its breakout mode on the 15-minute Keltner chart, but is instead currently testing that level now, with the RUT at 826.91 as I type. Mixed outlook there, but what bulls don't want to see is that the 30-minute 9-ema, now at 828.03, continue to form resistance on 30-minute closes or for the RUT to produce consistent 15-minute closes beneath the Keltner channel line that it's now testing.

Keene Little : 10/3/2007 10:44:36 AM

Getting a dip back down now. The banks have been doing well the past two days so I've been keeping an eye on MER. When it does the opposite to the broader market it's wise to listen to it. Right now it's supporting a rally so look to buy the dip, stop at a new daily low.

Linda Piazza : 10/3/2007 10:42:15 AM

SPX 1541.70-1541.80 Keltner resistance may hold into this 15-minute close, too. Potential support lies at 1538-1538.60 on 15-minute closes, and then at 1536.18. The SPX is at 1540.47 as I type.

Linda Piazza : 10/3/2007 10:33:46 AM

The TRAN's trading pattern sometimes changes after the inventories number, so we'll watch that over the next few minutes. Right now, it's mired in S/R near 4872-4880. Without a strong push upward to clear that resistance, it looks to me as if it could drop toward 4855, at least. It's at 4874.77 as I type.

Linda Piazza : 10/3/2007 10:31:15 AM

SPX getting tangled up in that 1541.70-1541.80 resistance zone on the 15-minute Keltner charts. It looks as if the resistance might hold into this 15-minute close at least. The SPX is currently at 1541.64 with a high for this 15-minute period of 1542.22.

From this point out, I think it's going to be a bit difficult to predict what might happen next. I thought from early on--due to the USDJPY and the pattern on the SPX chart--that we couldn't think it a slam dunk that the SPX would decline all that far, and warned subscribers accordingly. Now comes the hard part. We just have to see what develops because the SPX pattern suggest that we could get a choppy day with nothing precluding a candle shadow that goes above as well as below a small-bodied candle on the daily chart.

Keene Little : 10/3/2007 10:29:44 AM

We might be only in the middle of a larger sideways/down consolidation pattern so the risk in being long this morning (or short for that matter) is that we're going to see a lot of chop and whipsaws. But this morning's spike down was a good setup as it looked like the end of a nice a-b-c pullback from Monday. So we test it and see if it really was the end of the correction or not. A rally above yesterday afternoon's high is needed to confirm the next leg up is likely in progress.

Jeff Bailey : 10/3/2007 10:27:40 AM

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

Linda Piazza : 10/3/2007 10:25:19 AM

The USDJPY is now at 116.60 after having reached a high of 116.67. Something is going on here that I don't really understand. All I can say is in the paradigm that has existed for the last couple of years, this should be bullish rather than bearish for equities.

Keene Little : 10/3/2007 10:25:17 AM

If you got long at this morning's dip it's still a little early to raise your stop (except that it should be right under this morning's low for now). I'm waiting for a deeper pullback and rally to new daily high before pulling my stop up.

Linda Piazza : 10/3/2007 10:18:18 AM

The bounce attempt is beginning on the SPX, as per my 10:01 and earlier post. Resistance is near 1541.76 on 15-minute closes. Bears want to see that resistance hold on 15-minute closes if it's tested. Remember the possibility--depending on your scenario for the day--that this will be another of the days in a pattern that often includes small-bodied candles forming sideways consolidation and then eventually dropping to the climbing 10-sma. That means you might include the possibility that declines won't be too steep in your calculations for today. Fashion your profit-protecting plans with your preferred scenario in mind.

Jane Fox : 10/3/2007 10:13:56 AM

Please remember the AD line is still under -1000.

Jane Fox : 10/3/2007 10:12:26 AM

Ok now the VIX is making new daily lows and is becoming much more bullish. Looks like the market liked the ISM report.

Jane Fox : 10/3/2007 10:11:39 AM

WASHINGTON (MarketWatch) -- Nonmanufacturing sectors of the U.S. economy expanded in September at the slowest pace since March, the Institute for Supply Management reported Wednesday. The ISM nonmanufacturing index fell to 54.8% in September from 55.8% in August. The drop was lower than expected. Economists were looking the index to decline to 55.3%. The headline index is not a weighted average of the survey's other key components. The closely-watched employment index rose to 52.7% from 47.9%. New orders rose to 53.4% from 57.0%. Inflation pressures increased. The price index rose to 66.1% from 58.6%in the previous month.

Jane Fox : 10/3/2007 10:09:31 AM

The only internal that reacted to the 10:00 report was the USDJPY, which is now making new daily highs. VIX is still within its daily range and AD volume continues to make new daily lows.

Keene Little : 10/3/2007 10:06:55 AM

If the market does drop to a new low this morning then watch for bullish divergences on the short term charts for evidence of bottoming and then try a long play. Upside potential is to DOW 14200/SPX 1560 area.

Keene Little : 10/3/2007 10:04:50 AM

Bouncing off support. I'd say try a long play against this morning's low on the next pullback.

Jane Fox : 10/3/2007 10:02:56 AM

Market fell just before the ISM report. I will get you the details as soon as I get them. It came in at expected.

Linda Piazza : 10/3/2007 10:01:36 AM

So far, the SPX's first line of support on the 15-minute Keltner chart is not holding and the SPX is dropping toward the next, at 1535.96 on 15-minute closes. Again, somewhere in this zone would be a prime time for a potential bounce attempt, but will it happen and will it hold?

Linda Piazza : 10/3/2007 9:54:25 AM

The TRAN, our canary in the mine as Keene sometimes puts it, is dropping heavily this morning, dropping back from its test of the 200-ema again. It's got a river of moving averages below, too, ending with the 20-sma that's at 4819.48 on the daily chart. Below that is rising triangle support, at about 4780 this morning if I'm eyeballing it correctly. The TRAN is at 4866.34 as I type, so it's still just chopping around inside its triangle shape that's been forming in recent months. That triangle has begun to take on the form of a bullish right triangle (flat top, rising support) but that's countered by the fact that the TRAN, an index that usually leads the charge, can't break out of congestion while others have driven higher and left it behind in the dust. That's not usually the way it works. I remember back in 2003 questioning what the TRAN was doing, when against all seeming odds, it was breaking higher, and we have to question what it's showing now when it's not breaking higher with the SPX, OEX and Dow (on the daily chart, in recent weeks--I realize none of those is higher today).

Keene Little : 10/3/2007 9:51:30 AM

The DOW is now hitting its uptrend line from Sept 10th, near 13980.

Jane Fox : 10/3/2007 9:50:04 AM

Internals are all bearish now except the AD ratio so the bears have the ball and field position as well. Will they be able to run for a touchdown today?

Jane Fox : 10/3/2007 9:47:55 AM

AD line is solidily into bear country at -1151. You should now use rallies to sell.

Linda Piazza : 10/3/2007 9:47:27 AM

The SPX is now approaching potential Keltner support on 15-minute closes at 1538.42, with further support at 1535.97 on 15-minute closes. Somewhere in this zone would mark a normal place for a bounce attempt, with resistance currently at 1541.28-1542.80 on 15-minute closes. Bears first want the potential support to break, but, barring that, they want that resistance zone to hold.

Keene Little : 10/3/2007 9:46:40 AM

Two equal legs down in the pullback for SPX is at 1538.28 so that's potential support. If that doesn't hold then its uptrend line from Sept 10th is currently near 1535.40.

Jane Fox : 10/3/2007 9:44:35 AM

NEW YORK (MarketWatch) -- A sinking American dollar and a wounded U.S. banking industry are at the root of a boom in cross-border acquisitions of U.S. financial firms, analysts said Tuesday.

In the latest notable instance, TD Bank Financial Group (TD) said Tuesday that it's buying Commerce Bancorp Inc. (CBH) for $8.5 billion, a move that would double the Canadian banking giant's U.S. business.

That furthers a trend of foreign banks entering and expanding into attractive U.S. markets at premium pricing, Oppenheimer analyst Jennifer Thompson wrote in a research report about the TD Bank deal.

Linda Piazza : 10/3/2007 9:42:18 AM

I show the USDJPY at 116.41, temporarily pushing deep into the 116.30-116.50 resistance zone. So far, unless the inter-market relationships have changed, this is not supporting the idea of deep downdrafts in U.S. equities today, but watch as resistance is tested.

Inter-market relationships do change at times. There are all kinds of reasons. Perhaps the yen is dropping because there's fear of a recession here and many Asian countries depend on exports to the U.S., or any number of reasons. I haven't seen anything yet that makes me believe the indicator has reverted to the opposite of what it used to be--that gains here are bearish for U.S. equities--but that's not an impossibility. It happens from time to time that what's happening in Treasury yields changes its impact on equities, for example.

My conclusion for now? Unless the USDJPY turns sharply lower, be a little cautious about assuming too much downside in U.S. equities, but just keep this on the radar screen and don't make all trading decisions based on what's happening here.

Jane Fox : 10/3/2007 9:42:08 AM

Both the DAX and USDJPY are making new daily lows so the internals are all over the place this morning and that means chop.

Jane Fox : 10/3/2007 9:40:11 AM

VIX has reversed and is now making new daily lows. AD volume is still falling but the AD ratio is making new daily highs telling me the AD volume will start back up soon.

Linda Piazza : 10/3/2007 9:36:26 AM

What's your scenario for today? If you're an SPX trader, are you thinking along the lines of either a direct pullback to the 10-sma or else another couple of sideways consolidation days that allow the 10-sma to rise up under the daily candles, so that a dip to the 10-sma isn't much of a dip at all? Do the early signs fit your scenario? If you see the possibility that we could still be in for a couple of choppy sideways consolidation days, how will that impact how you treat your bearish entries and exits? My advice? See the possibility for a reversal, at least toward the 10-sma now at 1529.76, but realize that the SPX has recently tried to reestablish an old pattern in which the SPX chops sideways while the 10-sma rises closer, before dipping to test it. So, be cautious in protecting bearish profits.

Jane Fox : 10/3/2007 9:36:21 AM

AD line is now talking to us at -968 and AD volume falling. The bears have the ball.

Jane Fox : 10/3/2007 9:32:17 AM

VIX opens right at its PDH.

Jane Fox : 10/3/2007 9:31:44 AM

AD line is a neutral to bearish -368

Jane Fox : 10/3/2007 9:28:43 AM

I am looking for the DOW to retrace back to at least 13800 area before it takes off again. A deeper retracement back to the 50EMA would be much healthier but I'm not sure we will get it. Link

Linda Piazza : 10/3/2007 9:26:39 AM

I don't know if Jane has mentioned it yet, but the ADP employment figure showed 58,000 private-sector jobs added in September, and revised its August figure to 27,000 gains. This brings average private-sector growth for the last three months down to 42,000 per month.

Government jobs should add another 20,000 to September's 58,000 private jobs. If the ADP is right--and it isn't always--economists may be too optimistic with their estimate of job growth of 100,000-115,000 for the non-farm payrolls that will be released on Friday.

How will the market read this disappointing number? That depends on which fear--impending recession or building inflation--is most prevalent. Markets reacted badly to a disappointing nonfarm payrolls number last month, but some are going to cheer anything that says the Feds can go ahead and cut rates again. I'm not sure which fear is prevalent right now, but the possibility exits that this could at least introduce some caution ahead of Friday's number.

Keene Little : 10/3/2007 9:25:32 AM

The market was choppy yesterday and that choppiness continued last night and I expect it to continue this morning. Hopefully we'll get the pullback to a little lower than yesterday's low which will set up the next rally leg. Rallying into Friday's job number would be a good setup for the short side. Conversely a choppy pullback into Friday should set up a good rally. Bottom line is don't force any trades this morning as there's really no good setup yet.

Jane Fox : 10/3/2007 9:24:33 AM

So far the support at $79.00/bl is holding up the Crude market. Link

Jane Fox : 10/3/2007 9:23:06 AM

One has to wonder if the retracement in Gold back to its 23.60% retracement level is all we will get. I was hoping for a retracement back to at least $700.00 to position myself long. Link

Jane Fox : 10/3/2007 9:21:10 AM

Crude is back over $80.00/bl and is once again affecting the relationship between Gold and the US$.

The DAX was bullish overnight and interestingly it is trading. Linda mentioned yesterday that today is a German holiday but I guess the DAX is not on holiday. Link

Jane Fox : 10/3/2007 9:17:05 AM

Although all the patterns were similar overnight, the DOW and S&P closed the weakest yesterday so those two markets were the two that broke their previous day lows overnight.

I will once again reiterate that I think the markets will be weak for the rest of this week and probably into next. They need to take a breather and retrace and the deeper that retracement (to a point that is) the better the chance there is to bust higher and keep going. Link

Jane Fox : 10/3/2007 9:08:34 AM

Traders will be watching for the Institute for Supply Management's latest reading of its nonmanufacturing index, which is expected to fall to 55.3 in September, from 55.8, according to a MarketWatch survey of economists. Any reading above 50 indicates expansion in the sector. The data are due at 10 a.m. EDT.

Jane Fox : 10/3/2007 9:08:03 AM

Dateline WSJ - FRANKFURT -- Deutsche Bank Wednesday said it will book 2.2 billion euros ($3.09 billion) in charges on leveraged loans and trading books, although third-quarter net profit will still exceed the year-earlier figure because of tax credits and capital gains.

The German banking giant will take a ?700 million charge on leveraged loans and loan commitments in the third quarter, as well as a ?1.5 billion charge on structured credit products, residential mortgage-backed securities and relative value trading in both credit and equities, it said. Valuations have declined in the wake of the meltdown in U.S. subprime mortgage lending, as investors lost trust in credit products and banks have had difficulty selling those products at previously high prices.

Jane Fox : 10/3/2007 9:05:45 AM

CHICAGO (MarketWatch) -- The volume of mortgage applications filed last week decreased by 2.7%, coinciding with a week-to-week drop in interest rates on fixed-rate loans, the Mortgage Bankers Association said Wednesday.

Also on a seasonally adjusted basis, volume was up 0.4% compared with the same week in 2006, according to the group's weekly survey for the week ended Sept. 28.

Applications filed for loans to refinance existing mortgages were down 3.8% last week compared with the previous week. Home purchase mortgage applications slipped a seasonally adjusted 1.8%.

Jane Fox : 10/3/2007 9:04:21 AM

LONDON (MarketWatch) -- A narrow majority of MarketWatch readers who responded to an online poll this week said they are either "very" worried or "somewhat" worried about a market crash this month.

But nearly one in three said their portfolios are diversified and they remain upbeat about the market.

October marks the 20th anniversary of the 1987 stock market crash.

The poll was conducted over the first two days of October as part of MarketWatch's monthly Trading Strategies report. This month's report focused on the similarities and differences between the markets in October 1987 and this year

Linda Piazza : 10/3/2007 8:12:36 AM

What's happened with the USDJPY overnight? It climbed. Yesterday I had mentioned the 116.00 psychological barrier but had mentioned that 116.30-116.50 was really stronger resistance. About 45 minutes ago, the USDJPY hit an overnight high of 116.27. It's since pulled back a bit.

I've said before that what happens during the overnight period is as important as what happens during the time our markets are trading. That's because overnight actions can happen with as much volume or even more as what happens while our markets are open. In addition, this is in fact a currency pair and what happens in Japan can obviously impact the action of this pair.

Some clarification is needed, though. At 7:15 EST, neither market, ours or Japan's, was open, so it's possible that what we're seeing on this chart is akin to what we might see on a low-volume breakout attempt in futures overnight. We should definitely pay attention to such actions but also greet them with a bit of skepticism.

I show the USDJPY at 116.07 currently. So, while the timing of this breakout attempt is a little suspect, we should be aware this morning that if the currency pair holds at this level, it's supporting the idea of more testing of resistance levels rather than of any kind of steep decline, if its role as a sort of indicator index for equities remains intact.

That could all change after the Services ISM, and I do use this now as only one of many indicators I watch, rather than any kind of end-all, be-all indicator.

Linda Piazza : 10/3/2007 8:00:59 AM

$5.500 billion in repos mature today. The typical time for announcements from the Federal Reserve Bank of NY, through which the Fed conducts most of its temporary open market operations, is 9:40, so I'll let you know later what the Fed does, if anything.

Market Monitor Archives