Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
Keene Little : 10/9/2007 1:33:25 AM

NDX was the strongest of the indices on Monday and even did much better than the broader Nasdaq. So it continues to be a very narrow-based rally and even within the NDX only 41 stocks closed higher while 56 closed lower and 3 were unchanged. AAPL accounted for about two thirds of the NDX rally. Definitely narrow based.

I've been talking about a target zone of 2135-2170 (albeit a bit wide) and then earlier on Monday showed on the 30-min chart a projection to 2162.33 and the trend line along the highs since Sept 19th. Monday's high was 2163.26 where it closed and it tagged that trend line: Link . The negative divergence at today's 5th wave high supports the EW count and calls for a decline from here.

After Monday's decline in the DOW, SPX and RUT, followed by a corrective looking bounce in the afternoon, they appear to be ready to resume their declines. So it appears we could have a bearish non-confirmation of the tech rally if they all turn lower on Tuesday, which is the way it's looking from here. The only question in my mind is whether we'll first get a little more bounce to the correction before it tips back over.

Keene Little : 10/9/2007 12:25:54 AM

Tuesday's pivot tables: Link and Link

Jeff Bailey : 10/8/2007 11:51:26 PM

US Dollar Index (DXY) alert! 78.85 (30-minute delayed) ... gets the trade at MONTHLY Pivot/WEEKLY R1 overlap.

OI Technical Staff : 10/8/2007 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The Market Monitor has been archived.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 : 10/8/2007 6:13:22 PM

Expeditors Intl. To Replace TXU in S&P 500

DJ- Standard & Poor's on Monday said S&P MidCap 400 constituent Expeditors International of Washington Inc. (EXPD) will replace TXU Corp. (TXU) in the S&P 500, with Terra Industries Inc. (TRA) then replacing Expeditors in the MidCap 400 on Tuesday.

TXU is being acquired by a group of investors led by Kohlberg Kravis Roberts & Co. and Texas Pacific Group in a deal expected to close by Tuesday.

Standard & Poor's also said Guess Inc. (GES) will replace CDW Corp. (CDWC) in the MidCap 400 at a date to-be-announced. CDW is being acquired by Madison Dearborn Partners.

Jeff Bailey : 10/8/2007 6:05:30 PM

Closing U.S. Market Watch found at this

Jeff Bailey : 10/8/2007 5:16:13 PM

Closing Internals found at this Link

Jeff Bailey : 10/8/2007 4:44:38 PM

Should'a played it for my MM Profiles, but a bit too much for hypothetical $10K account. RIMM Link $105/$95 strangle cost was $1,060.

Call portion was $570 ($5.70/contract). Selling $13.40 bid locked in MINIMUM profit of $770 - $490 = $280.00

Jeff Bailey : 10/8/2007 4:35:20 PM

Baby Berk's ... BRK.B $4,109.99 +2.01% ... "ditto"

Jeff Bailey : 10/8/2007 4:34:31 PM

Berkshire Hathaway (BRK.A) $123,390.00 +1.89% ... nice follow through today.

Linda Piazza : 10/8/2007 4:01:08 PM

Okay, so what's your scenario for tomorrow? If the TRAN were ending lower than it looks as if it's going to do, mine might be altered a bit, but it looks as if the TRAN might end the day above the 200- and 72-ema's after piercing both. That means that they were tested and held as support. If they hadn't, that would look more bearish for the TRAN and, by extension, possibly the SPX, OEX and Dow. As it is, the TRAN's pop and close above the 200-sma last Friday has been reversed, so now the jury is still out.

The SPX is still due for a pullback toward the (to the?) 10-sma, so consolidation for another day or two might be suggested, if not quite predicted. Today acted just as expected, but this was a holiday, and so the action is somewhat untrustworthy. Today's pop off the low suggests that tomorrow's candle could be a green one, but a green one within the context of a consolidation that's drifting toward the 10-sma.

Keene Little : 10/8/2007 4:00:34 PM

That was a good play Jeff on RIMM. And not a bad idea to close out the calls. The daily chart shows a hanging man doji and the bulls do not want to see a red candle tomorrow otherwise it will confirm this revesal signal: Link

Jeff Bailey : 10/8/2007 3:57:45 PM

VXN.X 20.18 +2.07% ...

Jeff Bailey : 10/8/2007 3:57:15 PM

Hold the $95 Put(s) (RUL-VS) $0.10 x $0.13.

Keene Little : 10/8/2007 3:56:14 PM

This afternoon's rally is not being joined by the semis and that continues the bearish non-confirmation from the SOX. The relative strength chart of the SOX vs. the COMP shows the underperformance again.

Jeff Bailey : 10/8/2007 3:55:49 PM

RIMM Strangle Oct. $105/$95 Strangle alert! ... May I suggest that traders close out the RIM Oct. $105 Call(s) (RUL-JL) at the bid of $13.40.

RIMM $117.80 +3.90$ ...

Keene Little : 10/8/2007 3:53:28 PM

This morning the DOW broke below its uptrend line drawn from Sept 10th through Thursday's low. A retest of that line would be near 14060 so watch for potential resistance there for a short entry. That would be between a 38% and 50% retracement of the drop from Friday's high.

Keene Little : 10/8/2007 3:50:28 PM

GOOG shot higher and tagged 610 so at this point it's too bullish to consider another short play on it. I'll watch it tomorrow to see if there's any reversal but for now I'd stand aside on it. In the meantime NDX is now only 10 points from its upside Fib projection near 2170.

Linda Piazza : 10/8/2007 3:42:08 PM

The TRAN is trying to break higher again. It sometimes leads the SPX, OEX and Dow, so perhaps watch to see if it's successful. It's at 4937.50 as I type.

Linda Piazza : 10/8/2007 3:35:09 PM

It's been a slow day and a slower afternoon, but the fact that the SPX hit the top of its rising channel (9:37:35 post) along with RSI above 70 hinted that it was time for the SPX to go into a sideways consolidation mode or maybe even actually pull back toward the 10-sma. Especially with the bond market closed, the Japanese market having been closed on Monday and several other factors, this is the predictable if boring action. We couldn't even anticipate the 3:00 EST closing of the bond market as spicing up the day any, since it's been closed all day. I don't see anything set up on short-term SPX charts that promise anything more exciting over the near term, either, although buyers or sellers could come into the markets when those market-on-close orders come in, in a few minutes. I'm not getting my hopes up, though, and am just glad that you can't see me yawning.

Jane Fox : 10/8/2007 3:25:09 PM

There is still nothing telling me it is OK to start trading and I am almost 100% sure that will not change at any point today.

Jeff Bailey : 10/8/2007 3:16:16 PM

03:00 Internals found at this Link

Tab Gilles : 10/8/2007 3:10:10 PM

SHLD daily chart for previous post... Link

Tab Gilles : 10/8/2007 3:05:58 PM

Sears Holdings (SHLD) 10 minute chart Pennant... Link

daily... Link

Jeff Bailey : 10/8/2007 3:05:57 PM

03:00 Market Watch found at this Link

Linda Piazza : 10/8/2007 2:58:57 PM

SPX support just under 1549 on 15-minute closes, then at 1546.62. The support has thinned a little since my last post, but still looks a bit stronger than nearest resistance, up near 1551.36 on 15-minute closes.

Keene Little : 10/8/2007 2:55:57 PM

I see GOOG has pushed a little higher than the 602 Fib projection and is now hitting the trend line across the highs from April 2006 (shown on the chart I posted earlier--12:37 PM). The shorter term charts are showing some bearish divergences at the new high and I like the setup to test the short side right here just under 604, with a stop around 610.

Linda Piazza : 10/8/2007 2:53:22 PM

MSN's home page features an article titled "Inflation Fraud." The subtitle is "Why does the government pretend prices aren't rising?" Shall we conclude that some are feeling the bite of rising food and energy costs and not relying on "core" costs to tell them when their checks aren't going as far?

Jeff Bailey : 10/8/2007 2:44:54 PM

CHRYSLER WORLDWIDE SALES DOWN 3% IN 3Q

DJ- Chrysler posts a 3% drop in worldwide 3Q sales to 615,530 vehicles. For the U.S., the auto maker reports a 6.6% drop in sales to 465,730 vehicles, while sales for markets outside North America are up 20% to 62,516 vehicles.

Jane Fox : 10/8/2007 2:39:54 PM

DAX is now making new daily highs but is the only internal showing any signs of bullishness. Over the last few weeks I have found the DAX less and less reliable so in light of the fact that it is the only internal showing any signs of bullishness I would say this little rally should be sold.

Linda Piazza : 10/8/2007 2:39:33 PM

On a 15-minute Keltner chart, the SPX is ringed now with nearby support and resistance. Support looks a little stronger thatn resistance--and it's held, lending some credence to that observation--but not enough stronger to make any predictions with a great degree of confidence. It looks, however, as if the SPX is more likely to go on attempting to rise over the short term--whether successful or not--than decline much below 4906.60 on 15-minute closes. So, now the SPX has been offered a challenge and will probably promptly fall below 4900 and stay there!

Jane Fox : 10/8/2007 2:27:18 PM

All markets except the NDX are below their overnight ranges. The NDX is above its ON range. The love affair with the tech stocks has not run its course yet. Link

Keene Little : 10/8/2007 2:02:00 PM

Same for the DOW--minor new low but the bullish divergences at these lows continues so I'm not sure I'd be comfortable pressing the downside this afternoon. If tested I think DOW 14K will hold (minor throw-under at most).

Linda Piazza : 10/8/2007 1:57:16 PM

Minor new low on the TRAN, although by only a few cents. So far. Support has risen to 4905.46 on a 15-minute close. The TRAN is at 4915.19 as I type.

Linda Piazza : 10/8/2007 1:55:12 PM

Over the next few minutes, we're in a prime stop-running time of day. As I've mentioned before, I don't consider this an attempt to trick retail traders. Rather, as those representing big money orders come back after lunch, they want to see if support is going to hold before trying out big buy orders or see if resistance is going to hold before trying out big sell orders. So, if markets are run down and they pop right back up like a buoy popping back to the surface of the water, they know that support is likely strong. If they buy in that case, retail longs are going to complain that their stops were deliberately run just before the reversal, but wouldn't you want to know if support was strong enough before you spent a lot of money? If they push prices lower and they stay lower, bears are congratulating themselves on being on the right side of a trade. If the converse happens, if prices are pushed higher but bounce right back down, big money might know it's safe to sell and the bears will be complaining that their stops were run right before the move. It's akin to kicking the tires to see if they still hold air. The lesson? Be careful during this period of time.

Jane Fox : 10/8/2007 1:53:52 PM

SAN FRANCISCO (Marketwatch) -- Technology stocks shook off early weakness to pick up modest gains in Monday morning driven by a pair of merger deals and continued strength in Research in Motion, plus Google, which topped $600 for the first time.

Keene Little : 10/8/2007 1:52:01 PM

I'd like to see NDX push a little higher to complete a clean 5-wave move up from last Thursday's low. An upside Fib projection at 2162.33 (for equality between the 1st and 5th waves of the move) makes for a great target. The lower Fib projection at 2155.45 would essentially be a retest of this morning's high. There are a few possibilities from here including a little larger sideways consolidation before pressing higher. It takes a drop below 2135 as a heads up that we might have seen the high. Link

Jeff Bailey : 10/8/2007 1:48:21 PM

CHRYSLER GETS UAW STRIKE DEADLINE NOTICE

DJ- Chrysler says it has received an 11 a.m. EDT Wednesday strike deadline from the United Auto Workers, meaning the two sides have little more than 48 hours to agree to a new four-year contract before a potential work stoppage takes place.

DAI $101.74 -1.51% ...

Jeff Bailey : 10/8/2007 1:45:09 PM

NORTHERN ROCK UP AFTER LOAN, BUYER SPECULATION

DJ- Northern Rock trade sharply higher after weekend reports of increased interest from private equity groups and that Citigroup, the world's biggest bank, is planning to offer the troubled U.K. mortgage lender a pound 10 billion loan.

Jeff Bailey : 10/8/2007 1:39:36 PM

UPS EXPANDS FLEET WITH ALTERNATIVE FUEL VEHICLES

DJ- UPS is adding 306 alternative fuel vehicles to its 'green fleet' by placing an order for 167 compressed natural gas delivery trucks while taking delivery of 139 new propane delivery trucks in North America.

UPS $76.22 -0.24% ...

Jeff Bailey : 10/8/2007 1:38:10 PM

GOLDMAN SACHS PLANS HEDGE-FUND VEHICLE

DJ- Goldman Sachs wants to raise more than $500 million for a private-equity fund that will buy stakes in hedge funds, a person familiar with the matter says, adding fund will be mixture of firm's own cash and money raised from outside investors.

GS $228.83 +0.14% ...

Jeff Bailey : 10/8/2007 1:37:08 PM

NYSE FINES 15 FIRMS $10.43M FOR DELIVERY FAILURES

DJ- NYSE Regulation censures and fines 14 member firms and one former member firm a total of $10.43 million for prospectus-delivery failures. Largest fines were assessed to Citigroup Global Markets, Deutsche Bank Securities and Lehman Brothers.

C $47.92 -0.78% ...

DB $133.56 -1.18% ...

LEH $63.22 -1.18% ...

Jeff Bailey : 10/8/2007 1:32:41 PM

VONAGE SURGES AFTER SETTLING PATENT DISPUTE

DJ- Shares of Vonage Holdings surge 74% as the company agrees to pay Sprint Nextel $80 million in a licensing deal that covers past and future use of some 100 Sprint patents related to connecting Internet phone calls.

VG $2.03 +76.52% ... S $18.47 -2.84% ...

Keene Little : 10/8/2007 1:32:40 PM

I've updated the wave count on the NDX daily chart to better reflect what I think are the two potential counts. These are only small differences and both call for a high near here as the final 5th wave high for the rally from 2004: Link

The difference in the count though means we could see one more down-up sequence before finding the final high (which would probably get very close to its upside Fib projection near 2170). But it also could count satisfactorily as complete at today's high so it's risky either way at the moment until the bears can get the NDX back below 2100. As I pointed out last night, with the NDX stretched so far above its 200-week moving average I certainly don't like the upside from here (reward:risk is not favorable).

Jeff Bailey : 10/8/2007 1:27:36 PM

SAP TO BUY BUSINESS OBJECTS FOR $6.8B

DJ- SAP agrees to buy France's Business Objects for $6.8 billion, in a move to strengthen the German company's position in business intelligence software. SAP shares slip 5% while Business Objects climbs 15%.

SAP $55.90 -5.62% ...

BOBJ $57.49 +14.36% ...

Jeff Bailey : 10/8/2007 1:25:42 PM

TEXTRON TO BUY UNITED INDUSTRIAL FOR $1.1B

DJ- Textron agrees to acquire unmanned aircraft maker United Industrial, which operates through its AAI subsidiary, for $81 a share, a 7.1% premium to Friday's closing price. Textron shares slip 2%, while United Industrial gains 6%.

TXT $64.00 -2.11% ...

UIC $80.40 +6.32% ...

Linda Piazza : 10/8/2007 1:16:47 PM

The TRAN is threatening to break through the support it's testing, with that support from the current 4918.78 level down to 4900 being composed of everything from the important 200-ema on the daily chart to psychological support. Based on Keltner chart behavior, a break through about 4902 (it's dynamic and changing a little as I type) on a 15-minute close suggests that the TRAN could erase much more or maybe even all of Friday's gains. The TRAN can be a bit of a trickster, breaking through a resistance or support level only to reverse course almost immediately, so take this setup with some skepticism, while remaining aware of the possibility. The TRAN is at 4919.79 as I type.

Jeff Bailey : 10/8/2007 1:15:58 PM

01:00 Internals found at this Link

Keene Little : 10/8/2007 1:08:30 PM

The DOW is finding support at its July high of 14021. It's been cycling around that price level for the past week but the retest of last Monday's high on Friday left a very clear bearish divergence so it's looking weaker.

Jeff Bailey : 10/8/2007 1:06:14 PM

01:00 Market Watch found at this Link

Jeff Bailey : 10/8/2007 1:01:00 PM

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

Keene Little : 10/8/2007 1:00:43 PM

SPX is consolidating on top of its uptrend line from Sept 10th and it would be a natural place for a bounce (already started). This uptrend line has been redrawn a few times at each of the recent pullbacks so the more important trend line for the bears to break is the one along the lows since Sept 25th, currently just above 1547 and then the last pullback low near 1536. Until those levels are broken we could still see this chop its way to new highs. Link

Jane Fox : 10/8/2007 12:54:15 PM

AD Line -1043 is still bearish.

Jeff Bailey : 10/8/2007 12:38:54 PM

PetroChina (PTR) $181.35 -4.96% ... updated "ready to rumble" from 09/12/07 Link ... May be time for a rest, Mr. Buffett to further distribute.

Keene Little : 10/8/2007 12:37:50 PM

It's a well known fact that when general media publications have financial stories it usually marks the point where the market is likely near a turning point. It's not necessarily a good timing tool but it's something you should look for as part of your analysis in determining whether the market is nearing an exhaustion point for the move or still potentially in the middle of it. When general media reports something (as opposed to say the WSJ) then you can be assured that most people are already positioned.

Today's article in USA Today about GOOG hitting $600 and how bullish that is tells me we could be near the top for GOOG. And the daily chart I've been posting recently says the same thing. Last week I pointed to a Fib projection at 602.04 and the trend line along the highs from April 2006 (the top of a potential ascending wedge) as an area I'd watch for a top. Today's high so far is 601.45. Close enough? It's too early to tell but I feel GOOG is definitely vulnerable here: Link

Linda Piazza : 10/8/2007 12:14:12 PM

So far, the SPX has managed to maintain 10-minute closes above Keltner support now at 1548.97 on 10-minute closes, but it's also finding resistance at the 9-ema on that chart, with that now at 1551.20. One or the other has got to break, but it's possible that may not happen until the typical stop-running time of day that typically begins about an hour to an hour and a half from now.

Keene Little : 10/8/2007 12:00:30 PM

After showing the a-b-c bounce in oil last Thursday and some Fib numbers that pointed to a good spot to look for a short, it has dropped sharply lower since. I had pointed to a Fib zone of 80.73-81.00 as the level to look to get short (wave-c = 162% wave-a and a 62% retracement). The high in oil was 80.94: Link . I know some were thinking a short squeeze on the rally last Thursday and thought I was being foolish for recommending a short play but sometimes you need to trade against the crowd when certain levels are hit.

Jeff Bailey : 10/8/2007 11:54:16 AM

Action at $4.00 in the PTR-WL ... $3.90 x $4.10

Jeff Bailey : 10/8/2007 11:52:17 AM

Swing trade put alert! ... for one (1) of the PetroChina PTR Nov. $160 Puts (PTR-WL) at the offer of $4.10 ($3.70 x $4.10).

No stop for now, target $8.00 in the option.

PTR $181.42 -4.93% ...

Linda Piazza : 10/8/2007 11:51:59 AM

The TRAN has now retraced more than 50% of the rally from the 4830-ish support zone that held most of Thursday into Friday's high. That 50% level is just under 4827, and the TRAN is currently at 4924.24, having reached an intraday low of 4915.38. Why is this significant? This should have been significant support and wasn't. Also, this brings the TRAN back below the 200-sma on the daily chart, an average that it needed to close above to break out and just barely did on Friday. This would call into question that breakout.

Keene Little : 10/8/2007 11:45:31 AM

We could now be close to a bounce since some short term bullish divergences are starting to appear.

Jane Fox : 10/8/2007 11:44:33 AM

The internals are giving the green light to the bears. Still not sure I would try trading but if you must, the internals are saying keep it short. Link

Linda Piazza : 10/8/2007 11:39:07 AM

Support isn't holding on the SPX, but I'll mention next potential support anyway: it's at 1548.87 on 10-minute closes.

Keene Little : 10/8/2007 11:38:56 AM

What's your read on RIMM here at 115?

RIMM gapped up this morning and that was about its high for the day since it has been pulling back since. Exhaustion gap? We'll know more after today's close. If today's candle shows a gap up (so a higher high) followed by a reversal that closes below Friday's close then it will look like a key reversal day. It looks like another stock that Joe Retailer just had to have this morning and buying the top would be very typical. Smart money may have been selling into this morning's rally.

Jeff Bailey : 10/8/2007 11:28:09 AM

Select Financial SPDRs (NYSE:XLF) $35.57 -0.89% ... Will note symbol change to NYSE from AMEX.

Weekly Pivot Levels ... $33.45, $34.67, Piv= $35.32, $36.54, $37.19.

Monthly ... $31.07, $32.70, Piv= $34.18, $35.81, $37.29.

Keene Little : 10/8/2007 11:20:00 AM

A small consolidation here followed by one more new low for the day, if accompanied by some short term bullish divergences, could set up a larger bounce, perhaps back up to this morning's early bounce high (I'm looking at the SPX pattern). If we get that kind of move then it should set up another short play later. I'm waiting for that kind of bounce followed by a new low before I lower the stop on my ES short.

Linda Piazza : 10/8/2007 11:15:53 AM

FWIW, the RUT has confirmed a head-and-shoulders formation seen on its 10- and 15-minute charts, with the formation setting up Friday through this morning. The neckline climbs, and was at about 842 when it was crossed a few minutes ago. H&S formations haven't been too reliable of late, so I'm watching Ketlner charts instead for targets. It looks as if there might be near-term resistance now just above the RUT's current 838.65 level up through 839.67 on 10-minute closes, with strongest resistance on that chart from 840 to just below that 842 level. If the RUT can't produce 10-minute closes above that resistance, it risks falling toward 835.12.

Jeff Bailey : 10/8/2007 11:15:25 AM

11:00 Internals found at this Link

Keene Little : 10/8/2007 11:10:05 AM

It looks like this morning's tech buyers have had second thoughts about being long. A sell program has hit all the indices together.

Linda Piazza : 10/8/2007 11:06:23 AM

The SPX is approaching the downside target that the 10-minute Keltner chart promised, but that I wasn't so sure would be fulfilled because of 1552-1554 potential support. That Keltner line has now risen to just above 1551, so that might be support on 10-minute closes. Next support on that 10-minute chart is currently at 1548.77.

Jeff Bailey : 10/8/2007 11:03:26 AM

11:00 Market Watch found at this Link

Jane Fox : 10/8/2007 11:02:08 AM

SAN FRANCISCO (MarketWatch) -- The dollar was higher against its major counterparts in holiday-thinned trading Monday, as investors watched a meeting of European finance ministers for clues as to the euro's direction.

U.S. government offices and bond markets were closed Monday for the Columbus Day holiday. No economic data were scheduled to be released.

The dollar index, which measures the U.S. currency against a basket of major currencies, was up 0.4% at 78.625. The index was at 78.320 in late U.S. trading Friday.

Jane Fox : 10/8/2007 11:00:52 AM

Here is a daily chart of Crude and it looks like it is going for another retest of support at $79.00/bl Link

Jeff Bailey : 10/8/2007 11:00:36 AM

Oil Service HOLDRs (NYSE:OIH) $189.86 -1.42% ... Will note symbol change to NYSE from AMEX.

Jeff Bailey : 10/8/2007 10:59:39 AM

Software HOLDRs (NYSE:SWH) $43.80 -0.77% ... Will note symbol change to NYSE from AMEX.

Keene Little : 10/8/2007 10:51:19 AM

The risk during this environment is for a program trade (either side) to spike price in one direction, hit a bunch of stops and then reverse. There are good days to trade and there are bad days. Care to guess which one this is?

Linda Piazza : 10/8/2007 10:50:44 AM

The TRAN is lower this morning, but has so far resisted sinking below the 4931.85 low reached during the 9:45 fifteen-minute candle. It's at 4940.95 as I type. A new low would not be good for the SPX, OEX or Dow.

Jane Fox : 10/8/2007 10:46:01 AM

Hopefully you have not tried trading this. Link

Linda Piazza : 10/8/2007 10:45:41 AM

The USDJPY is at 117.47, rising again after dipping to 117.39 about thirty minutes ago. The high has been 117.49, reached about an hour ago. It's getting ever closer to that 50% retracement of the summer decline.

Jane Fox : 10/8/2007 10:34:14 AM

So are we having fun yet? I thought today would be a little slow but this is painful.

Keene Little : 10/8/2007 10:16:01 AM

I had shown this SPX 10-min chart on Friday and pointed out the 1563 level as a potential upside target and the fact that the ascending wedge pattern points to the high probability for a relatively swift decline back to the beginning of it, so back down to the 1540 area: Link . The break below 1554 should be confirmation of the break down and so far I don't see a reason to change that expectation.

Linda Piazza : 10/8/2007 10:11:51 AM

The SPX is coming up to retest the 10-minute 9-ema from the bottom to see if it holds as resistance now. That's now at about 1556.17 on 10-minute closes. Nearest support on this 10-minute chart is at 1554.16 on 10-minute closes. SPX at 1555.70 as I type. Remember that per the SPX's observed pattern, this could be a sideways consolidation day, chopping up bulls and bears both. We haven't had our 10-sma test yet, so the presumption (a false one last week) is that it's going to be working itself toward a daily 10-sma test within another four or five days.

Jane Fox : 10/8/2007 10:10:34 AM

However remember the AD line is still below 0 so don't get too excited.

Jane Fox : 10/8/2007 10:09:22 AM

DAX is spiking and VIX is falling. These are bullish signs.

Keene Little : 10/8/2007 10:01:00 AM

Typically I'd move my stop down on a short play to just above this morning's gap so maybe ES 1571.50. I don't want to manage my short too closely because I'm trying to position for a longer term trade. After a larger degree first wave down and then 2nd wave correction I'll add to my position. Needless to say, this market has much to prove to me that it's turning down for good. In the meantime I'm taking baby steps on the bear side and will give my short some room to breathe and hopefully stay alive.

Because the techs have been relatively stronger (small caps too), I don't want to short them yet. Once I'm more convinced that the market has turned down then I'll recommend a short on either/both of those since they should lead us to the downside. But especially today with the bond market closed, we could get a choppy day that I have no interest in trying to trade short term. I'll call out setups as I see them but it's a good day to get some reading done.

Jane Fox : 10/8/2007 10:00:46 AM

You may want to cash in for the day and come back tomorrow.

Linda Piazza : 10/8/2007 10:00:21 AM

No repos announced yet today as the Fed continues what appears to be a campaign to reduce the amount sloshing through the system, to pull back on that extra liquidity that was introduced.

Linda Piazza : 10/8/2007 9:58:26 AM

The SPX's 10-minute Keltner intraday chart showed the most relevance to the SPX's movements late last week, so it's that chart that I'm still watching this morning, but it's usually the 15-minute that I prefer. It shows RSI trending below 30, so it should be time for a bounce attempt sometime soon. The 10-minute shows an ultimate near-term downside target of 1549.46 as long as the SPX finds resistance on 10-minute closes at a line now at 1556.16. The 15-minute shows potential support before that, at 1551.85 on 15-minute closes.

Jane Fox : 10/8/2007 9:55:19 AM

So far the most volatile part of the day has been less than volatile as a matter of fact it has been down right boring. This is turning out to be a very good day to get caught up on our sleep.

Keene Little : 10/8/2007 9:51:17 AM

Joe Retailer could be piling into the tech stocks this morning based on all the bullish hype he's been reading in the media lately. It would be a typical move.

Keene Little : 10/8/2007 9:49:39 AM

Traders are still liking the sexy techs relative to the others but as the NDX 10-min chart shows, new highs with lower MACD highs doesn't exactly point to a strong breadth in its rally: Link . That would need to change before I started to feel more bullish this index.

Jane Fox : 10/8/2007 9:44:12 AM

VIX is now falling and making new daily lows so that tells me the bulls are gaining control. I think it will be a battle all day today and would be very careful trading anything today.

Linda Piazza : 10/8/2007 9:37:35 AM

At the close of the market on Friday, I posted an SPX chart showing that the SPX had hit and pierced the top of its rising channel on the daily chart, but hadn't closed outside it. In my eyes, resistance held. However, barring a strong downdraft, the 1552-1555 zone should probably now be considered likely support, so is sideways-sideways/up consolidation in store? Here's a chart: Link

Jane Fox : 10/8/2007 9:35:26 AM

AD line is now -685 so the bears are gaining control.

Jane Fox : 10/8/2007 9:33:56 AM

VIX opens above it previous day range and that is bearish.

Jane Fox : 10/8/2007 9:31:54 AM

AD line opens at -128 - neutral.

Jeff Bailey : 10/8/2007 9:31:03 AM

Swing trade put raise target alert! ... for the iShares Russell 2000 IWM Oct. $78 Put (IOW-VZ) to $81.40 in the underlying. (up from $79.25)

Jane Fox : 10/8/2007 9:27:51 AM

This is a very good spot for the DOW to take a breather as well, which I suspect it will do today. Link

Jane Fox : 10/8/2007 9:22:46 AM

The Russell 2000 small cap index is certainly playing a game of catch up to its larger brethren but needs to take a breath and maybe revisit support at ~825 before it takes a run at yearly highs. Link

Jeff Bailey : 10/8/2007 9:22:44 AM

Weekly/Monthly Index Pivot Matrix found at this Link

Jane Fox : 10/8/2007 9:19:00 AM

Crude is stabilizing (not climbing) and the US$ and Gold are back into an almost tick for tick indirect relationship again. Link

Linda Piazza : 10/8/2007 9:16:07 AM

The USDJPY has continued rising during the overnight session and is currently at 117.37. If the old paradigm for the inter-market relationship between this currency pair and equities still exists, this should be good for equities. Yet we see futures lower. What's happening?

At least three possibilities exist. First, the old paradigm might still exist and the higher USDJPY might be warning bears not to get too excited yet. Any early equity dip might be bought. Second, the old paradigm might still exist but those aware of the inter-market relationship might be eyeing a key resistance level now being approached. With the USDJPY at 117.37 as this post is prepared, that currency pair is fast approaching a 50% retracement of its summer decline, with that 50% Fib level at about 117.81. A 50% retracement of any reasonable decline on any underlying is almost always significant resistance, so those aware of the paradigm in the past might have already begun pulling back, awaiting that test.

Third, the paradigm might have changed. Is that possible, and why? Sure, it's possible. Why? Because the reason behind the rise in the USDJPY and the implications for U.S. equities might have changed. If the USDJPY is changing because inflation worries are rising and some believe that our Fed, instead of easing, will be forced to stay their hands or maybe even raise rates, the dollar would strengthen against other currencies. However, the specter of higher lending rates might not be considered particularly friendly for equities.

So, which is it? I don't have a clue. I've been warning for some time that a time would come when this inter-market relationship might change, and that we should be watchful for that time. So, add a pinch of skepticism to your watching of the currency pair's action and your prediction of what it means for equities. However, if a bear, be forewarned that this might still mean you should be careful about your bearish expectations this morning. I think the time is fast approaching when this currency pair's advance might be stalled again at or near the 50% retracement, but for now, it's still got almost 0.50 to go before it hits that level.

Now it's time for a warning for bulls. When the USDJPY hit the 38.2% retracement level, there were some deleterious effects on U.S. equities, at least as measured by the SPX. On 8/23, the USDJPY pierced but couldn't stay above that 38.2% level. On 8/24, the USDJPY climbed again and managed to sustain levels juuust above that 38.2% level, but then it began a decline that continued a couple of days. From 8/24's close to 8/29's intraday low, while the USDJPY pulled back, the SPX lost 47.39 points. I'm of course not saying anything like that will happen this time. I'm just saying that if this inter-market relationship is indeed still intact and if the USDJPY should get knocked back after its initial test of the 50% retracement level, a test that might occur any day now, the possibility of an SPX pullback exists, too. I'm just saying that you should be writing this down in your trading plan, factoring it in as you plan your trades, deciding ahead of time how you'll treat your bullish equity plays as the USDJPY tests that 117.81-ish area, how you'll set your stops.

Here's something to remember, something that absolutely should be included in your trading plans: On Thursday, Japan, Singapore and, I believe, Thailand announce decisions by their central banks, although I can't find a listing of these reports currently. That means Wednesday night for us, if that's correct. That absolutely could impact this and other currency pairs.

Jane Fox : 10/8/2007 9:16:01 AM

The overnight session was very quiet and I suspect the intraday session to be as well. Link

Keene Little : 10/8/2007 9:15:10 AM

If you're short against Friday's high then you're in pretty good shape, more so on ES than the others. I lowered my stop to 1572 near the close which is where it's still located. The techs look like they could push a little higher after what looks like an overnight consolidation so keep your stop relatively tight for now.

Jane Fox : 10/8/2007 9:04:20 AM

No economic data are scheduled today due to the federal holiday (Columbus Day). Bond markets are closed.

Linda Piazza : 10/8/2007 7:05:54 AM

No repos mature today, so any repos the Fed announces, if any, would amount to a net add.

Market Monitor Archives