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Keene Little : 10/12/2007 12:14:38 AM

Friday's pivot tables: Link and Link

The daily candle on the RUT is a good example of what a bearish engulfing candle looks like and it's usually a strong reversal signal as a key reversal day: Link . A higher opening, higher high for the day and then a lower close--it's a bearish signal but what we don't know is whether or not it's the usual pre-opex Thursday flush in preparation for driving the market higher next week.

The move down is sufficiently bearish to have me looking for a bounce to get short but I'll continue to take profits quickly and stay wary of a possible drive right back up to the highs.

NDX's pullback hasn't changed its bullish trend, yet, but GOOG does sport a clean wave count that could easily be called complete at today's high. This stock has been hyped to the extreme and everyone who wanted it is probably already in (minus those who sold out today). I like the wave count on it that calls the end of the rally where it hit the top of its parallel up-channel from 2006. The only thing I don't like, and this is a big caution, is the lack of negative divergence at its high. Link

If the decline finished and we get a bounce on Friday, watch for retests of broken uptrend lines for possible short entries. The DOW and SPX 60-min charts show some possibilities in this regard: Link and Link

What those charts don't show is the possibility for a crash leg lower as a 3rd of a 3rd wave down gets underway. I don't consider that high odds but mention it in case you're long and hoping for a bounce to exit some of your positions.

One other interesting chart to show you, because I like the wave count (it's a classic looking impulsive count) is a daily chart for Countrywide Financial (CFC). For those who are studying EW this is a good example: Link . There's even alternation between the 2nd and 4th waves (wave-2 is an a-b-c zigzag and wave-4 is a flat triangle). Triangles commonly point to the last leg (down in this case) to complete the larger degree move. A 5th wave projects down to 7.77 for equality with wave-1. From $18 that's still a nice little short play.

OI Technical Staff : 10/11/2007 9:59:59 PM

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Jeff Bailey : 10/11/2007 5:39:11 PM

Go Rockies! See you tomorrow.

Jeff Bailey : 10/11/2007 5:38:41 PM

Oh ... sold the rest of previously mentioned SOHU at $43.75 it looks like.

Jeff Bailey : 10/11/2007 5:29:04 PM

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

CLOSED the SWF-KJ, OLN-AD, IHH-KN, XLF-KI and when bids started disappearing, the NVR.


Jeff Bailey : 10/11/2007 5:10:16 PM

Swing trade put target adjustment ... for the PetroChina PTR Nov $160 Put (PTR-WL) ... Spike in volatility has me wanting to exit at EITHER $8.00 in the option, or $160.00 in the underlying.

Example: If PTR $193.28 +3.03% trades $171.50 tomorrow (MONTHLY Pivot) and the PTR-WL is $8.00, then its gone.

VIX.X 18.88 +13.25 today.

Keene Little : 10/11/2007 5:09:25 PM

When I look at the high flyers in the NDX, those responsible for most of its rally, I get a mixed picture from them as to whether or not I should be looking for a large consolidation before heading higher later this month or if instead they could be topping right here. So it doesn't help me answer my own question about whether the NDX will consolidate and head higher or instead start a large decline from here. Just need more price action.

GOOG though does sport a clean wave count that could easily be called complete at today's high. This stock has been hyped to the extreme and everyone who wanted it is probably already in (a few less after today's big selloff from its high). So I like the wave count on it that calls THE top as price hit the top of its parallel up-channel from 2006. The only thing I don't like, and this is a big caution, is the lack of negative divergence at its high. Link

Jane Fox : 10/11/2007 4:51:22 PM

Economic Report tomorrow include:

8:30a.m. Sep Producer Price Index. Expected: +0.5%. Previous: -1.4%.

8:30a.m. Sep PPI, Ex-Food & Energy. Expected: +0.2%. Previous: +0.2%.

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

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

10:00a.m. Mid-Oct Reuters/U Of Mich Sentiment Index. Expected: 84.2. Previous: 83.8.

10:00a.m. August Business Inventories. Expected: +0.3%. Previous: +0.5%.

Keene Little : 10/11/2007 4:51:12 PM

There's still a bullish way to view the sharp pullback in the RUT today (wave-c in an expanded flat a-b-c correction from last Friday's high) and that says we should look for another move higher for the RUT. I mention that again because I don't want bears to get complacent about today's sharp move down. We know pre-opex moves can be head fakes, an opportunity for the Boyz to pick up some front-month call options, sell a boat load of puts, etc. So don't take anything for granted here.

But I must say the daily candle on the RUT is might bearish looking--a bearish engulfing candle giving us a key reversal day (typically): Link . A higher opening, higher high for the day and then a lower close--it's a very bearish signal.

So I'll continue to look for a bounce to get short but I'm more than willing to take profits quickly. I was peeling off my short positions during this afternoon's decline so obviously I didn't get to fully participate in the decline. I even hedged with a small long position near the end of the day. I'm as bearish as they come about this market but I have to see a lot more of this price action before I become convinced the market has indeed topped.

Jeff Bailey : 10/11/2007 4:31:37 PM

True story: Three (3) times today I had an SPY call trade typed into the MM with a $160 target. Never did hit the "post" button as I kept thinking ... "oil? and transports."

Jeff Bailey : 10/11/2007 4:28:25 PM

Email Question: ... Is the recent cross of the 50ema below the 200ema on the transports meaningful and telling?

Jeff's Reply: ... Perhaps! It is one of the "key sectors" (see Monday's Market Wrap). Some technicians (like myself) view the 50-day SMA as an "intermediate-term" moving average, and the 150-day, or 200-day SMA as a longer-term SMA. When the "intermediate-term" is stiiiillll trending lower, but trying to round out, yet is below its longer-term SMA, that is a sign of BULLISH caution for certain.

Any ACTIVITY in today's MM and account management that suggests bullish caution?

Keene Little : 10/11/2007 4:26:02 PM

A bounce in SPX, especially if takes until tomorrow afternoon, could go back up to just shy of 1565 for a 62% retracement and retest its broken uptrend line in the process. This is pure speculation from here. We could instead see it gap down and run much lower (calling today's decline as a 1-2, 1-2 wave count and the next move down would be a strong 3rd of a 3rd wave down). So I can't recommend a trade from here since it's too risky either way. I'll wait until I see what happens tomorrow morning. Link

Keene Little : 10/11/2007 4:19:28 PM

It's hard to tell whether or not the move down today finished the first leg down but if so then we should get a little larger bounce tomorrow. I'm staying on the bearish side of this move so the two possibilities that I see from here are shown on this DOW 60-min chart: Link

Slightly higher is the trend line along recent lows, currently near DOW 14027. If we get a small pullback and then another leg higher then it could bounce a little higher. A 38% retracement would have it reaching up to 14045. A little larger bounce could see a rally back up to its broken uptrend line from Sept 25th near the 50% retracement at 14074 or even 14103 for a 62% retracement. A recovery back above 14145 would suggest today's decline was just a bear trap.

Jeff Bailey : 10/11/2007 4:22:44 PM

Email Question: ... From yesterday, but ready for tomorrow! ... I was wondering if the market does continue down here, would Friday's gap be the most likely spot for a bounce once filled?

Jeff's Reply: ... Yes! I think that there have been a lot of traders "sell short, stop high" not honoring that and a gap lower tomorrow is the opportunity to keep losses small, or get squared up.

IWM-VZ are gone on such a gap, spike in volatility. I've got a plan for the EWJ-WO's too!

Jeff Bailey : 10/11/2007 4:02:53 PM

Dow Transports (TRAN) 4,891.10 -0.86% ... just can't find a bid. Not yet anyway. Driving a bull "batty."

Keene Little : 10/11/2007 4:01:45 PM

It was a nice stick save at DOW 13950 (on the nose). The bulls keep it alive for now so bears need to stay cautious.

Jeff Bailey : 10/11/2007 3:59:04 PM

Gosh Linda ... that's your job. I've got enough open profiles to keep track of.

"Wow me!"

Jeff Bailey : 10/11/2007 3:57:46 PM

See signs of "deer in headlights" out there. A lot of observations, but not sure what to do.

Jeff Bailey : 10/11/2007 3:56:08 PM

Symbol Correction alert ... iShares Japan EWJ Nov. $15 Puts (EWJ-WO) ... (not "I"WJ) ... looks like some traders figured it out, but want to make sure.

Linda Piazza : 10/11/2007 3:55:35 PM

Good gravy, Jeff. What would you suggest?

Jeff Bailey : 10/11/2007 3:50:24 PM

IWM $83.12 -1.17% ... sits on that heavy OI $83 Call. Heavy put at $80 and $81.

Bugger trades $81.40 and the IOW-VZ are gone.

IOW-VZ $0.18 x $0.21.

Keene Little : 10/11/2007 3:50:14 PM

This little bounce might be the 4th wave correction for the move down from today's high. If so it might break lower into the close or give us a quick low tomorrow morning (for the 5th wave) to be followed by a larger bounce back up. A retest of SPX's broken uptrend line from Sept 25th will be near 1564-1565 by mid day tomorrow and would equate to around a 62% retracement of today's drop. That's all speculative right now. First we need to see what develops from the current bounce.

Jeff Bailey : 10/11/2007 3:45:04 PM

F5 Networks (FFIV) $41.56 -1.39% ... off high of $43.00. Let's hold those FLK-AH $5.40 x $5.60.

Jeff Bailey : 10/11/2007 3:43:33 PM

GoldCorp. (GG) $32.07 +1.65% ... also off highs of $33.15.

Let's hold those GG-AZ $2.85 x $2.95

Linda Piazza : 10/11/2007 3:42:43 PM

Jane may have already mentioned it, but the USDJPY has declined all the way to 117.08. It actually pierced 117.00 but then has bounced from that. This comes after the USDJPY tested the 117.81 level that I've been mentioning for a couple of weeks as marking an important Fib and historical level that might prove to be strong resistance.

Jeff Bailey : 10/11/2007 3:41:57 PM

PetroChina (PTR) $192.38 +2.55% ... off session high of $201.60.

Let's hold those PTR-WL's for now.

Jeff Bailey : 10/11/2007 3:40:13 PM

Wow Linda! What do you think traders should do?

Jeff Bailey : 10/11/2007 3:38:23 PM

You think Mr. Greenspan has critics for raising rates in 2000?

Jeff Bailey : 10/11/2007 3:35:19 PM

IF ECB were to raise rates, nobody will want to be long Japan (in my humble opinion).

Linda Piazza : 10/11/2007 3:31:44 PM

Let's try something more helpful than "wow" to subscribers. The RUT is now inching below its 10-sma and the top trendline of its former rising price channel. This should be a potential bounce point, and bulls certainly want it to be. The SPX has also dropped all the way to the 10-sma test, a test that I kept saying was way overdue. For the last couple of weeks, I've been telling subscribers to think ahead of how they'll treat a 10-sma test, whether bulls will buy automatically on that test. I counseled that you might consider how the SPX gets to the 10-sma, with a zigzagging retreat to it looking much different than a plummeting retreat through it. The SPX is attempting to steady on the 10-sma, so you're in a quandary, as I warned you might be. Personally, I think the SPX is also long overdue for a midline or bottom-of-the-channel test, too, even if it's going to continue to be bullish in character, even if it's going to stay in that channel. So, if you're thinking of buying the 10-sma test, be aware that you're risking a further fall to the midline at about 1540-1541 or even a bottom-of-the-channel test.

Keene Little : 10/11/2007 3:31:30 PM

DOW bounced off 13952. Whew, that was close. Only 30 more minutes for them to hold on. This move down following the little bounce is looking like it could be the 3rd wave. If so we should see more selling right into the close. Then perhaps a small consolidation tomorrow morning and a new low before getting the bigger bounce back up to test recent support turned resistance.

Jeff Bailey : 10/11/2007 3:28:45 PM

Disclosure: I currently hold bearish position(s) in EWJ.

Jeff Bailey : 10/11/2007 3:28:14 PM

Swing trade put(s) alert! ... for three (3) of the iShare Japan EWJ Nov. $15 Puts (IWJ-WO) at the offer of $0.65.

EWJ $14.49 -0.06% ... No stop for now, target $14.00.

Linda Piazza : 10/11/2007 3:26:56 PM

Wow. I do not feel silly at all any longer.

Keene Little : 10/11/2007 3:21:35 PM

The DOW is within 20 points of its key level at 13950. If that breaks then the fat lady has sung her song.

Keene Little : 10/11/2007 3:18:41 PM

SPX has now broken yesterday's low, the first lower low in the leg up from Sept 25th. With the break of the uptrend line, confirmed with a break of yesterday's low, is usually a solid indication that that leg up is finished. And that leg up should have been the last one for the rally from August.

This is why I say we don't have solid agreement between the indices at the moment--NDX looks ready for a sideways/down correction (although I have a wave count that could easily justify its high as the end of the rally) and SPX looks like a clear top has been put in.

You all know I'm bearish the market and right now the NDX is the only index that maintains a potentially bullish pattern here. But if I go with the majority of the indices, all the bearish non-confirmation signals (e.g., the banks and Transports) and the higher probability for this October to be hard down, I continue to park myself in the bear camp and look for shorting opportunities. Today's high was a nice setup.

Jane Fox : 10/11/2007 3:17:01 PM

Obviously that higher low didn't confirm did it?

Keene Little : 10/11/2007 3:10:17 PM

First test for the tech bulls coming up--its uptrend line is now at 2137 (printing 2139 here).

Keene Little : 10/11/2007 3:05:21 PM

If NDX breaks much below 2140 that would scare the tech bulls as it would be a break of its uptrend line from August. Again, until that uptrend line is broken this is just a pullback within a very bullish up-channel. My attempt has been to identify THE top and there's a good chance we just saw it today. But this is a game of chances and not certainties. Trade this for now and don't be bashful about taking money off the table when you see a big and fast move.

If I were looking at nothing else and had no bias then I'd be looking for a correction to the NDX rally and then another move higher into the end of October: Link . It will be a while and a big decline before I can say this possibility doesn't look plausible anymore. The 4th wave correction (pink) says expect a lot of chop and whipsaw over the next week or two. Just another reason to trade this market and don't go for the home runs.

Jeff Bailey : 10/11/2007 3:03:45 PM

03:00 Market Watch found at this Link

Linda Piazza : 10/11/2007 3:01:33 PM

I don't know if anyone else has mentioned it yet, but the RUT is dropping heavily, and is now at 837.56, just a few points above its 10-sma at 833.10. That moving average is aligned iwth the RUT's climbing channel, a channel that the RUT broke above last Friday. Bulls want this support to hold, of course, and don't want to see the RUT pushed back below the 10-sma or the top of that channel.

Jane Fox : 10/11/2007 3:01:30 PM

Market is trying to make a higher low but that will not be confirmed until the swing high at 2:45 is breached.

Keene Little : 10/11/2007 2:54:34 PM

Neither side can get complacent here. Tops are normally a "process" marked with lots of choppy whipsaw price action (usually creating a rolling top). Bottoms are often sharp. As part of a topping pattern, this DOW 60-min chart shows the possibility for another push higher in an expanding triangle pattern. Link

The key level for the bears is 13950--until that level is broken stay on your toes if you're short. If you're a longer term bullish trader and trying to stay away from the noise, I'd use a break of 13950 for your stop.

Jeff Bailey : 10/11/2007 2:46:10 PM

The "BIDU of homebuilders"

Jeff Bailey : 10/11/2007 2:45:29 PM

NVR $492.78 +3.22% ... oh my!

Tab Gilles : 10/11/2007 2:41:21 PM

Axel Weber comments: Link

Jeff Bailey : 10/11/2007 2:41:12 PM

Looks like just a little pre op-ex manipulation. Bids just "vanished" for a bit.

Keene Little : 10/11/2007 2:39:10 PM

Snap a Fib retracement on this drop and watch the 38%-62% retracement zone for resistance. I'm also going to be watching for a 3-wave bounce into that zone (assuming we get one) as an opportunity to short the bounce.

Jane Fox : 10/11/2007 2:37:34 PM

Not only the DOW but the SPX needs to either slow down or retrace and let the 50EMA catch up. Link

Keene Little : 10/11/2007 2:37:33 PM

It now looks like a 5-wave move down so I'd expect to see a larger bounce over the next half hour. So it's a good time to peel some money off the table if you shorted this move down. It could keep crashing lower but short term I see risk moving over to the bears' side.

Keene Little : 10/11/2007 2:36:11 PM

It looks like long covering. All those fund managers who felt like they were missing the boat and jumped in long have now been spooked out of their positions. When people talk about smart money they're referring to commercials. The non-commercials are the retail traders which include the majority of fund managers and they get caught up in the emotions of the market.

Linda Piazza : 10/11/2007 2:34:45 PM

SPX's 15-minute 9-ema is now at 1567.31. SPX at 1561.45 as I type.

Jane Fox : 10/11/2007 2:34:43 PM

The DOW needs to retrace back to at least 13800 but heck you are probably getting really tired of me talking about this.

Since 13800 is a shallow retracement it will probably retrace more just to throw the bulls into a panic and let the bears say, "I told you so." Then it will turn around and make us all wrong. Link

Linda Piazza : 10/11/2007 2:32:02 PM

The SPX is now below that rising trendline that's been in place at least since 9/28, but it's testing typically strong 15-minute support at 1557.97-1558.95. The breach of the trendline has been minimal so far, but this is not a normal decline to such a potential support level and I would . . . the SPX punches lower again. Whatever your exit plan for your bullish play was, follow it.

Jeff Bailey : 10/11/2007 2:31:54 PM

Swing trade long exit alert ... the 1/4 position in shares of NRV Corp. (AMEX:NVR) at the bid of $486.

Jeff Bailey : 10/11/2007 2:26:45 PM

Goog gravy! ... might have missed it. RIMM $112.92 after spike low $106. RUL-VS $0.10 x $0.12.

Linda Piazza : 10/11/2007 2:23:42 PM

Shall we say all say "volatility" together? SPX 9-ema now at 1570.05.

Jane Fox : 10/11/2007 2:22:44 PM

DAteline WSJ - The Federal Reserve may have stopped the economic bleeding caused by a summer credit crunch, the latest WSJ.com forecasting survey suggests, as economists turned more optimistic in the last month.

Survey conducted Oct. 5-9.The survey, conducted Oct. 5 through Oct. 9, showed the average forecast for chance of recession moved lower to 34%. That was the first decrease since June and followed a forecast of a 36% probability of recession in the September survey. Expectations for payrolls growth and corporate profits were also up for the first time in the second half of the year. Meanwhile, most forecasts for gross domestic product either stayed the same or moved higher following four consecutive downward revisions. Only the fourth-quarter expectations were slightly lowered -- by 0.1 percentage point to 1.8% growth.

The economists overwhelmingly approved of the Fed's decision on Sept. 18 to cut the target for the federal-funds rate by a larger-than-expected half percentage point. Seventy-six percent said the move was appropriate, compared with just 22% who thought it was too aggressive. Just one economist felt that the cut wasn't aggressive enough. That contrasts with a recent, but unscientific, WSJ.com reader poll in which 60% of respondents said the Fed action too aggressive

Keene Little : 10/11/2007 2:22:06 PM

SPX is now down to its uptrend line. It's a good place for a bounce/consolidation.

Linda Piazza : 10/11/2007 2:21:29 PM

The SPX just hit that trendline I mentioned in my 2:15:56 post, with Keltner support at 1559 and 1558.18 on 15-minute closes. Typically, this support is strong enough to prompt a bounce, so that would be the expectation this time, but today has been anything but typical, and I'd be careful of my expectations. The 9-ema on this chart is way up at 1569.10 but is descending quickly.

Jane Fox : 10/11/2007 2:20:02 PM

The DOW futures have fallen more than 100 points in about 30 minutes.

Keene Little : 10/11/2007 2:20:00 PM

This is the sharpest decline since the Sept 25th low was put in. Something tells me this one is different. Could McMillan have inadvertently called a top? Certainly the bullish sentiment in the market is at an extreme.

Jeff Bailey : 10/11/2007 2:19:28 PM

Swing trade call exit alert! ... for the Select Financial SPRs SLF Nov $35 Call (XLF-KI) at the bid of $1.38.

SLF $35.60 +0.26% ...

Jeff Bailey : 10/11/2007 2:17:45 PM

Intercontinental Exchange (ICE) alert! $159 ...

Linda Piazza : 10/11/2007 2:15:56 PM

A typical thing to have happen after breakout status is erased on a Keltner chart is for prices to rise back up and test resistance either the 9-ema or the breakout level again. The 9-ema is now at 1571.68 with the breakout level just above that. I don't know that's going to happen any time soon because the drop is so steep--the very reason that you need those profit-protecting plans made in calmer times. A rising trendline in place for several days now crosses at about 1560 with Keltner central channel support below that at 1558.97, so that zone should prompt a bounce attempt if nothing else does.

And, depending on what happens the rest of the day, I may not feel so silly now.

Jane Fox : 10/11/2007 2:14:57 PM

I am out of the YM short but if you decided to stay in you are doing well. Looks like the VIX nailed a top today.

Jane Fox : 10/11/2007 2:12:40 PM

Couldn't have said it better myself McMillan.

Keene Little : 10/11/2007 2:12:15 PM

I would have been happy with a small red candle to confirm the reversal candlestick on the SPX 60-min chart. This one put an exlamation point on it: Link . First support is at 1565 and then the uptrend line near 1560.

Jane Fox : 10/11/2007 2:11:25 PM

Last week's upside moves on Monday, October 1, and Friday, October 5, pushed most averages, including the S&P 500 ($SPX) to new all- time highs. Despite that bullish action, there were still some skeptics regarding the strength of the broad market. Such skeptics were likely under-invested fund managers who were hoping for a pullback to allow them to buy into the market.

The market is rarely so accommodating, though, and proved it by rocketing higher after a rather benign release of the FOMC meeting minutes on Tuesday of this week. Once the market started to move upwards on that news, the buyers jumped in and propelled it to yet another new all-time high. This is fairly standard action, which is usually caused by under-invested bulls rather than shorts having to cover (in our opinion, the shorts covered a while ago, to a large extent).

These buyers are desperate to show a high percent of money at work and so are anxious to spend their cash before the next reporting period (month-end October, most likely).

Technically, the small pullback on Monday would be the first support level for $SPX: the 1540-1550 area. Below that, the 1520- 1530 area is support as well, although we don't expect to see that level tested soon.

The equity-only put-call ratios continue to decline on their charts. That is intermediate-term bullish. Some might point out that they are nearing the bottom of their charts, and that is true. But, there is no reason why they can't go lower than the lows of the past two years. They often have in the past. We will remain bullish on this indicator unless it rolls over and begins to rise.

Market breadth (advances minus declines) has finally joined the party. Advances have completely dominated declines in recent weeks. As a result, it is constructive to see breadth register a severe overbought condition.

Volatility indices ($VIX and $VXO) have continued to decline, reaching their lowest levels since last July. A declining $VIX chart is bullish for the broad market, from an intermediate-term basis, and that's what we have now.

In summary, our indicators are still bullish -- especially from an intermediate-term viewpoint -- and thus we expect higher prices for the broad market.

Linda Piazza : 10/11/2007 2:10:59 PM

Obviously, the SPX has erased its breakout status on the 15-minute chart, at least if it finishes this 15-minute period below about 1572.20. It's at 1567.11 as I type. If you've been watching the SPX's actions with regard to 9-ema's and breakout levels, you were prepared with plans on how you would deal with such an occurrence, and you can act accordingly, depending on when you entered a play, your own account management practices and other parameters. One thing bulls do not want is for the SPX to end the day at or below its current level because the SPX is now back inside its rising price channel after piercing it and after attempting for several days in a row to climb above it.

Jane Fox : 10/11/2007 2:13:27 PM

I will not be the monitor tomorrow and Monday so McMillan was nice enough to send his weekly update a day early so I could post it. LOL

Jane Fox : 10/11/2007 2:07:46 PM

Aren't you glad now you waited for support to break and did not take a short in Crude? Link

Jane Fox : 10/11/2007 2:03:31 PM

Ya gotta just love that VIX!! Link

Jane Fox : 10/11/2007 2:02:40 PM

Start managing your YM short now. I have a limit sitting at 14216 but you could trail your stop and ride this down if you like.

Keene Little : 10/11/2007 2:01:44 PM

NDX was leading us to the upside and as I had suspected it would, it's now leading us to the downside. NQ is the first one into negative territory and to close this morning's gap.

Jeff Bailey : 10/11/2007 2:01:22 PM

Swing trade call exit alert! for the Intercontinental Exchange ICE Nov $170 Call (IHH-KN) at the bid of $6.20.

ICE $161.39 -0.80% ... "should'a gone" today in my opinion.

Jane Fox : 10/11/2007 2:00:41 PM

Here goes Gold!! Link

Linda Piazza : 10/11/2007 1:59:35 PM

September's Treasury Budget was originally scheduled to be released at 2:00, but at least one source wasn't sure whether it would be released as originally scheduled.

Keene Little : 10/11/2007 1:59:03 PM

This drop is a trend-change kind of move (looks like a small 3rd wave down). This sharp move down should be followed by a small consolidation and then another drop lower (for a 5-wave move down from the high) before setting up a larger bounce. That would indicate to me that we've got our trend change and shorting bounces will be the right play.

Jane Fox : 10/11/2007 1:58:12 PM

I am now short YM and have a stop at 14269 and will probably push that to 14271.

Jeff Bailey : 10/11/2007 1:57:32 PM

With RUT.X approaching its all-time high and OLN bumping $23.00, lets move to the sidelines on OLN.

Alcoa (AA) $38.88 +0.38% ...

Jeff Bailey : 10/11/2007 1:56:22 PM

Swing trade call exit alert! for the Olin Corp. OLN Jan $20 Call (OLN-AD) at the bid of $3.00.

OLN $22.57 +1.30% ...

Keene Little : 10/11/2007 1:55:40 PM

If you're short then you should now lower your stop to just above that last bounce. This is only a 3-wave pullback so far and any push back up from here would leave it that way and point to new highs. Manage this tight until we get some evidence of a trend change to down.

Linda Piazza : 10/11/2007 1:55:03 PM

Next support beneath the SPX support currently being tested is from 1571.26-1571.97 on 15-minute closes. This is the breakout level above which the SPX has been trading (on the 15-minute chart, at least) all day, so bulls would like to see it hold as support.

Keene Little : 10/11/2007 1:53:07 PM

Do we have some doubting Thomases in this rally?

Hello Folks, What do you make of the mega OMC actions everyday by these inflationary fighting fed-heads....they are printing money so fast its hard to keep up...The Primary dealers (the large Brokerage-firms and banks are delighted I bet easy-money for them).I wonder if they are the primary driver of buying high-beta crap-stocks at nose bleed valuations, and each-others stock? Thoughts? Steve

Lower earnings, rising inflation, retail sales weak, CEO's pessimistic, must be an Uncle Ben will save rally. Barry

Shh, don't scare the sheeple. They're liking this rally and want it to go on forever.

Keene Little : 10/11/2007 1:48:25 PM

Thanks to Allen for the link to a site that provides a lot of symbols you might find useful. Copy and paste into your spreadsheet: Link

Jane Fox : 10/11/2007 1:46:07 PM

I will be taking YM short at 14239 with a stop a couple of ticks above daily highs.

Keene Little : 10/11/2007 1:41:48 PM

Assuming for now that we've topped, short any bounce against today's high.

Jane Fox : 10/11/2007 1:36:27 PM

This, of course, would be a top.

Jane Fox : 10/11/2007 1:35:57 PM

I see S&P futures making new daily highs but the VIX is not making new daily lows - Could we have another day when the VIX marks a top or bottom?

Keene Little : 10/11/2007 1:34:18 PM

A drop below SPX 1573 (coinciding with Linda's observation) would be a drop back inside the ascending wedge pattern after a brief throw-over above it. That would also create the first sell signal here.

Keene Little : 10/11/2007 1:31:27 PM

The closing candle on the 60-min chart looks like a shooting star at resistance. It's a reversal signal and a red candle following it would be the confirmation. Link

Jeff Bailey : 10/11/2007 1:30:48 PM

01:00 Internals found at this Link

Linda Piazza : 10/11/2007 1:26:13 PM

A prime stop-running time of day from 1:35-1:55 approaches. The SPX's 15-minute 9-ema has now risen to 1573.53 on 15-minute closes, with further support layered down to 1570.93 on 15-minute closes. I never am good at deciding whether this coming-back-from-lunch period will result in big money attempting to run prices higher or lower, so I have no guesses on the direction of a push during that period, if one occurs. The SPX is at 1574.40 as I type.

Keene Little : 10/11/2007 1:24:39 PM

I've had DOW 14217 as an upside Fib target for the past couple of weeks and had mentioned before that I wondered if the DOW was going to drag the SPX higher (than its 1563 target) in order to tag that level. Just might happen if this can push a little higher. But the wave pattern and bearish divergences tell me we could be topping right now.

Keene Little : 10/11/2007 1:18:21 PM

I might have been trying to call it too close. I won't chase it lower--I prefer to let the market come to me otherwise I wait for the next bus. Chasing busses is hazardous to your health.

Keene Little : 10/11/2007 1:15:01 PM

We're getting the "one more high" now so watch for evidence of topping to try a short against the high. A drop back below the last pullback would be a confirming sell signal if you'd rather wait for that. But trading light and trying a short at ES 1587 if tagged, stop at 1591.

Jeff Bailey : 10/11/2007 1:04:36 PM

01:00 Market Watch at this Link

Keene Little : 10/11/2007 1:03:49 PM

As I've mentioned many times before, wave counts on the very small timeframe charts are less reliable than the longer term charts, but it can be useful as a guide when combined with the other technical tools. This SPX 5-min chart shows the wave count as I see it for the move up from yesterday's low: Link

We should be in the 5th wave now starting at the mid-morning low. It should be a 5-wave move and that's why I'm looking for a small consolidation and then "one more high" to finish it off. It should be negatively divergent against the high that was just put in.

The Fib projection at 1575.71 is where wave-5 = 62% of wave-1 and the reason I'm thinking the lower projection (vs. where it would be equal at 1579.51) is because of the relatively small 3rd wave (so the move up is losing momentum). Now we'll see if it sets up this way.

Linda Piazza : 10/11/2007 1:03:38 PM

It's common for the 9-ema's to flatten out during the lunchtime lull. Hasn't happened today, at least not on the SPX, not yet. The 15-minute 9-ema is now at 1572.88.

Linda Piazza : 10/11/2007 1:00:31 PM

SPX 15-minute 9-ema now at 1572.46, with further support ranging beneath it, from 1569.90-1571.43. SPX at 1574.52 as I type.

Keene Little : 10/11/2007 12:42:28 PM

I've been struggling with an intermittent internet connection this morning and now it's getting to be more out than in. So if I drop out for a bit you'll know why. Ideally we'll get a small consolidation and then new high (looking at the 5-min chart of SPX) to give us the final 5th wave in the move up from yesterday's low. I'm now getting an internal Fib projection for that move to just under 1576 so that's the setup for now as we get closer to what I believe will be a high for at least this move.

Jeff Bailey : 10/11/2007 12:40:06 PM

CNBC discussing the "Denver housing" market and foreclosures.

Only market showing strength in CME housing futures of late.

Jeff Bailey : 10/11/2007 12:38:51 PM

Swing trade call exit alert! ... let's blow out of the SanDisk SNDK Nov. $50 Call (SWF-KJ) at the bid of $3.80.

SNDK $50.06 -3.13% ...

Linda Piazza : 10/11/2007 12:34:28 PM

RUT 15-minute 9-ema at 849.68, with the RUT at 851.54. The RUT, however, unlike the SPX, has dropped back below the outer channel line, so is no longer in breakout status . . . or it hasn't been. It's currently testing 15-minute resistance that marks the breakout status.

Linda Piazza : 10/11/2007 12:32:27 PM

SPX 15-minute 9-ema has now risen to 1571.78. SPX at 1573.92 as I type.

Jeff Bailey : 10/11/2007 12:32:08 PM

PetroChina (PTR) $201.01 +7.15% ... "on fire," and Asian markets trader was too.

Jeff Bailey : 10/11/2007 12:30:52 PM

# Days Supply was "steady" at 21.1, but not sure that's enough reason to try and hold onto an oil futures short.

Linda Piazza : 10/11/2007 12:31:44 PM

Gosh, I guess I'll have to be Chicken Littlette then, Keene. I told Jane yesterday in a private email that I feel that I stand somewhere in between the two of you in my stance toward the market. For the last couple of weeks, I've just been asserting that people need to pay attention to where the SPX is in that pattern it has of running up higher, consolidating a few days and then dipping to the 10-sma (which hasn't occurred in far too long, in my opinion), but I'm confused by the market action. I can nod my head to an argument for why the SOX might not be a predictor any longer of tech health, although I'm not sure I wholeheartedly subscribe to it, but do we no longer need to ship goods? Can we toss over the worrisome behavior of the TRAN? I heard this morning that markets have already priced in low earnings growth (or zero? or negative?) for this quarter and are looking forward to better quarters, but when exactly was that priced in and where can I find that in this world--literally the whole world--of record higher prices? So, I keep suggesting ways and places to protect bullish profits when it's really still just been a buy high and sell higher sort of financial universe. You don't need good account management, apparently, but just jump and suppose that prices will eventually move higher, too, even if your entry was bad, and that the higher prices will deliver a profit. And that scares me.

Jeff Bailey : 10/11/2007 12:29:35 PM

EIA: Inputs, Refinery Op. Capacity Table at this Link

Keene Little : 10/11/2007 12:24:08 PM

This is the short play setup on SPX and only time will tell if it's going to work. But I don't see anything on this chart that tells me it won't. Shorting the SPX 1574.57 Fib target continues to look good with a stop perhaps around 1578 in case there's a bit of a throw-over. Link

Linda Piazza : 10/11/2007 12:18:24 PM

Now that some of the first strong momentum has slowed, I'm dialing back up to the 15-minute chart on the SPX. The 15-minute 9-ema now converges with the breakout channel marker on that chart, with both near 1570.90 on 15-minute closes. Both were tested on the 11:15 candle this morning, prompting the bounce into the new high, so now bulls would like to see any test result in another bounce. SPX at 1571.75 as I type.

Keene Little : 10/11/2007 12:17:51 PM

Sorry Linda, Chicken Little is my title.

Linda Piazza : 10/11/2007 12:15:13 PM

TRAN just hit a new LOD of 4919.31, albeit only a few cents below the previous low of the day. It's at 4919.74 as I type. I feel like Chicken Little here, reporting on this, but everything I've been taught tells me that something is wrong with the TRAN descending while the rest of the indices act as if the economy was on fire. While I typed this post, the TRAN bounced up to 4922.28, into another challenge of the 200-ema.

Jeff Bailey : 10/11/2007 12:01:12 PM

EIA: Inventory Table found at this Link

Linda Piazza : 10/11/2007 11:57:55 AM

Some indices' 5-minute charts sport little potential H&S's on top of their climbs since mid-afternoon yesterday. While I don't trust these formations any longer, we can still watch them to tell us whether bears are gaining strength (confirmation, at least some downside follow-through) or whether the bulls still hold all the strength (zoom up from the right-shoulder area or, alternately, from near the neckline, either just before or just after the confirmation). The RUT is already attempting to invalidate its formation by zooming up from the right-shoulder area, and if it gets much higher than it's current 849.92 and doesn't immediately spike down, leaving only a candle shadow at this level, I'd say it's invalidated it. I think the SPX already has invalidated its version. Bulls still win.

Keene Little : 10/11/2007 11:54:15 AM

Not related to today's trading but one worrisome development this year has been the large jump in credit card debt in the past several months. As soon as the housing ATM machine was closed consumers have been resorting to their credit cards as the consumer loan of last resort.

This increase in credit card debt is bad enough but what's really worrisome is the fact that retail sales are dropping. That means credit cards are being used more for necessities (e.g., food, gas, utilities and for some, mortgage payments) and less for the nice-to-have things.

To make matters worse, banks and Wall Street have been packaging these credit card loans and selling them to investors. Credit card based asset-backed securities (ABS) have recently become hot items. In the US they are the only asset-backed segment to experience growth in 2007, up 30 percent on the year to September to $69.2 billion. And they're probably rated AAA investments. Will we ever learn?

Linda Piazza : 10/11/2007 11:44:49 AM

Next resistance is difficult to define (An understatement, if there ever is one!), but the five-minute chart that I've been using suggests that it could be (emphasis on "could") at 1572.07 on five-minute closes.

Tab Gilles : 10/11/2007 11:43:20 AM

Granite Construction (GVA) $56.73 +$2.09 +3.83%, one of the nation's largest civil contractors, specializes in roads, bridges, and mass transit.

Congress and state and local governments are allocating billions of dollars for the repair, renovation, and construction of bridges, roads, mass transit systems, and power grids.

Weekly chart... Link

PnF chart... Link

Keene Little : 10/11/2007 11:41:01 AM

It's still looking more like a consolidation here so until proven otherwise I would look for higher highs yet.

Tab Gilles : 10/11/2007 11:30:42 AM

Sears Holdings (SHLD) $146.42

William Ackman, whose Pershing Square Capital Management holds an 11.6% stake in Sears Canada, opposed Lampert's attempt to take over its northern affiliate. Link

Bullish Divergence on the weekly chart... Link

PnF chart Bullish Objective $210 Link

Linda Piazza : 10/11/2007 11:25:07 AM

After falling beneath the 5-minute 9-ema and even the breakout level on that chart, the SPX has now risen to retest the 9-ema from the underside. The SPX is at that average as I type, at 1570.97. Short-term bulls want to see the SPX climb back above this average and sustain values above it. If any tested the downside with a put play, they want to see this average now serving as resistance.

Again, this is an -ema on a five-minute chart, so it's not predictive of longer-term action. This is only a very early and perhaps false indicator we've been watching. Still, a failure below it was an early signal that the strongest momentum had waned, at least temporarily, so it just gave a heads-up to be prepared, to know where your stops should be, to have a plan for any contingency.

Jeff Bailey : 10/11/2007 11:17:42 AM

11:00 Internals found at this Link

Keene Little : 10/11/2007 11:16:41 AM

SPX below 1570 is a sell signal but keep your stop relatively tight. It should work from here and not bounce sharply back up otherwise the drop could be part of a larger consolidation.

Linda Piazza : 10/11/2007 11:15:58 AM

Beating my dead horse again (I've got a golden retriever at my feet as I type, so I'm not likely to be beating any real animal, dead or alive), I note that the TRAN is now at 4921.65, back testing the 200-ema again, and not so very far below yesterday's 4905.13 low of the day.

Linda Piazza : 10/11/2007 11:13:49 AM

First 5-minute close on the SPX below the 9-ema. All that shows so far is that the early excessive exuberance is waning, but be on the lookout for other signs if you're in bullish positions. Sticking with the 5-minute chart for now, I see potentially strong support near 1570.12 and also at 1569.70. Those signify the breakout levels on this chart.

Tab Gilles : 10/11/2007 11:13:24 AM

Global Sources (GSOL) $30.80 +$3.00 Link

I'd mentioned this on Tuesday....

Tab Gilles : 10/9/2007 9:14:29 AM Yahoo (YHOO) Yahoo buys 10% of Chinese B2B company Alibaba.com. It already owns 40% of its parent company. Link Take a look at one of Alibaba's competitors, Global Sources (GSOL), should see activity there today. Link PnF Quadruple Top Breakout; Price Objective $34.50.

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

The RUT looks like it might be starting to break down and could lead the way lower. Getting some mixed signals between indices so caution needed on both sides.

Linda Piazza : 10/11/2007 11:08:28 AM

SPX 5-minute 9-ema is now at 1571.40 and the SPX, at 1570.83, is dropping below it. This is not yet a five-minute close beneath it, I must warn. And what does it prove if it does close beneath it? Only that it's doing something different than it's done all day so far, not closing above it. It means the strongest early momentum is waning, if that close happens. It means that if you're in short-term bullish plays, you know what your exit plans is, but not that you have to jump out of plays on this one very short-term sign alone.

Jeff Bailey : 10/11/2007 11:03:16 AM

11:00 Market Watch found at this Link

Jane Fox : 10/11/2007 11:01:26 AM

BOSTON (MarketWatch) -- Troubled home builder Beazer Homes USA Inc. Thursday said it will be required to restate financial results due to an independent internal investigation into its mortgage origination business and other practices.

The company (BZH) said it will be unable to precisely quantify the impact on previous results until the probe is completed. However, it expects an overall increase in profit, but a decrease in earnings for fiscal 2006.

Beazer has determined it will have to restate financial statement related to fiscal years 2004 through 2006 and the interim periods of fiscal 2006 and fiscal 2007. The restatement is also expected to impact results for fiscal years 1999 through 2003.

Jane Fox : 10/11/2007 10:54:37 AM

AD volume to new daily highs and VIX hovering at daily lows so if you are trading keep it long.

Keene Little : 10/11/2007 10:54:27 AM

Depending on which index I'm looking at I get either the impression we're just consolidating in preparation for pushing higher or we're chopping slightly higher and putting in a top soon. For example, SPX appears to be chopping its way higher. This is typically an ending pattern and price is now very close to the 1574.57 target and hitting its trend line along the recent highs.

This could fail at any time now and it could be fast. I continue to like the setup for a short play at that target level. A break below SPX 1570 would tell me we've probably seen the high for the day and would be a more conservative short entry (but tougher to figure where your stop should be).

Jane Fox : 10/11/2007 10:45:54 AM

AD volume is making new daily highs and VIX is hovering at daily lows so this is NOT the time to be short.

Linda Piazza : 10/11/2007 10:45:27 AM

The SPX hasn't even deigned to test its 10-minute 9-ema yet today, so I'm rolling down to a 5-minute chart. The SPX has been bouncing from its now-flattening 5-minute 9-ema, and it's doing it as I type. That average is now at 1570.84. Short-term bulls can watch for sustained 5-minute closes beneath this 9-ema for the first signs that the momentum has waned, but that won't necessarily spell the end to the rally. It will be a sign that you'll need to be watchful and have an exit plan in mind, just in case.

Jeff Bailey : 10/11/2007 10:38:42 AM

EIA: Weekly Nat Gas Storage Table Link ... Build of 73 Bcf

Jane Fox : 10/11/2007 10:35:45 AM

I know I said I would get off my soapbox but this little puppy needs to slow down. Link

Jeff Bailey : 10/11/2007 10:32:52 AM

Crude Oil Stockpiles ... Down 1.7M Barrels. Consensus was for +1M

Linda Piazza : 10/11/2007 10:26:02 AM

The SPX's 10-minute 9-ema has now risen to 1568.20, with the breakout level now risen to 1567.43. Short-term bulls would prefer to see those hold as support on 15-minute closes.

Jane Fox : 10/11/2007 10:25:59 AM

I watch 5 different internals; the VIX, AD volume (absolute), AD volume (ratio), the DAX and the USDJPY currency pair. I give the most weight to the VIX then the AD volume then the ratio and mostly just watch the DAX and USDJPY. The VIX and AD volume are bullish but the other three are not and those three together have enough weight to keep the market from making new daily highs.

Keene Little : 10/11/2007 10:22:01 AM

Still consolidating instead of making new highs yet. I don't see anything yet to change my expectation for another push higher. If we do get the new high after consolidating I'll be looking for bearish divergences against this morning's early high. That would add confidence in expecting it to be the high to try a short play (it will be the completion of a 5-wave move up from yesterday's low).

Jane Fox : 10/11/2007 10:19:47 AM

USDJPY is now making new daily lows supporting the DAX's new daily lows.

Jeff Bailey : 10/11/2007 10:18:34 AM

SanDisk (SNDK) $49.84 -3.54% ... notably weak ... Downgraded at Oppenheimer to "hold"

Jeff Bailey : 10/11/2007 10:16:29 AM

US Oil Fund (USO) alert! $63.03 +1.00% ... double top buy signal.

Jeff Bailey : 10/11/2007 10:14:20 AM

10:10 Market Watch found at this Link

Jane Fox : 10/11/2007 10:14:07 AM

I am keeping my eye on the DAX this morning; it is making new daily lows (based on the American cash index open at 9:30) but the DOW is not. These two will get back in sync eventually but I'm never really sure which one will pull the other in its direction.

Linda Piazza : 10/11/2007 10:12:43 AM

In all the excitement, I forgot to check the Fed's site. The Fed has announced three repos this morning, totaling $35.500 billion. These are set against a whopping $46.000 billion maturing today, so that there's still a net drain of $10.500 billion.

Jane Fox : 10/11/2007 10:09:23 AM

Since all the internal ducks are not in line the markets are choppy.

Jane Fox : 10/11/2007 10:08:36 AM

AD line is now a bullish +1245 and that means the bulls have field position but they do not have total control of the ball. For control of the ball the VIX has to be making new daily lows and AD volume making new daily highs. AD volume is making new daily highs (although the AD ratio is not) but the VIX is not making new daily lows.

Linda Piazza : 10/11/2007 10:08:26 AM

Ahead of the inventory numbers in a few minutes, the TRAN still can't break significantly higher. It's at 4952.73 as I type, up for the day, but down from its 4968.15 high of the day.

Linda Piazza : 10/11/2007 10:07:22 AM

So far, so good for SPX short-term bulls. On the 10-minute Keltner chart, the 9-ema has now converged with the breakout level and will soon move above it. That's now at 1567.12. Bulls will want to see that maintained on 10-minute closes. Right now, the SPX has instead been bouncing from another channel line, one that's currently at 1569.47, but it should sooner or later test that 9-ema.

Keene Little : 10/11/2007 10:01:10 AM

Getting a little consolidation here and if SPX can now push up and tag that 1574.57 Fib level I just might have to take another stab at a short play there.

Linda Piazza : 10/11/2007 9:58:05 AM

The channel line marking breakout status for the SPX on the 10-minute chart has now risen to 1567.13. Ideally, bulls would like to see this maintained on 10-minute closes, as it also keeps the SPX above the top trendline on the rising price channel on the daily chart. To fall back inside that channel after pushing above it might question the breakout on that daily chart, particularly if a decline were to be sustained very long or go very deep. The 9-ema on this chart is at 1565.87, so that's the next level of support on 10-minute closes below the breakout line. The SPX is at 1569.03 as I type.

Linda Piazza : 10/11/2007 9:55:35 AM

USDJPY now at 117.57. It's erasing its breakout status on the 10-minute chart, but I do anticipate that it might rise up toward 117.67 or so to retest it.

Jane Fox : 10/11/2007 9:52:48 AM

The retracement you see on the Gold chart is the kind of retracement I am looking for on the Index charts.

Jane Fox : 10/11/2007 9:51:19 AM

WASHINGTON (MarketWatch) -- Prices of goods imported into the U.S. rose by 1% in September, rising on a big jump in prices of imported petroleum, the Labor Department reported Thursday.

The rise in the September import price index follows a drop of 0.3% in August.

Imported petroleum prices shot up by 5.4% in September after falling back by 1.1% in August, the data show. With a year-over-year increase of 20.1%, imported petroleum prices have been a big factor behind the overall year-over-year gain in import prices.

Taking out petroleum prices, however, import prices fell 0.2% in September. Excluding all fuels, import prices fell 0.1% in September.

Linda Piazza : 10/11/2007 9:48:50 AM

Breakout level on the SPX's 10-minute chart is now 1566.97, so equity bulls would like to see this maintained on 10-minute closes to show a preservation of the strong momentum. That's also just below the rising top trendline on the daily chart's rising price channel, so you want to see the SPX stay above that and not drop back inside that channel. These Keltner lines are dynamic, so they'll still be inching up a little due to the strong morning climb.

Linda Piazza : 10/11/2007 9:46:36 AM

You've heard me mention the important resistance at about 117.81 for the USDJPY. Just before the stock market opened, the USDJPY hit a high of 117.76, rising up to test that resistance. It's at 117.68 as I type. Equity bulls do not want to see the USDJPY drop back strongly from this test, which is a test of the 50% retracement of the pair's summer drop. Don't count on the action of this currency pair as the end-all and be-all of indicators, but do consider what it's doing.

Jane Fox : 10/11/2007 9:45:51 AM

Gold had a nice retracement and I think the next test of yearly highs will break through and the next stop will be 127.20% fib level at 785. Link

Keene Little : 10/11/2007 9:45:43 AM

The banks continue to mark time while the big indices get this out of their system. BIX is slightly in the red this morning and dropping while the rest of the market makes like everything is just fine.

Linda Piazza : 10/11/2007 9:42:47 AM

As is typical lately, the TRAN is climbing, but certainly not showing the same bullish hallmarks as some other indices. It's not breaking out above this week's highs, for example. It's below both the 200-sma and the 50% retracement of the summer's decline, so it's bearish by both these parameters. I feel as if I'm beating a dead horse here, but why is the TRAN not participating? It can't be just crude, because the TRAN rose before while crude was rising. If the stock markets are ignoring the expectations for low earning growth this quarter, why aren't the stocks comprising this economy-sensitive index? Unless there really are new paradigms for the market, something is wrong. Everything I learned previously tells me to be cautious, but I've been cautious the whole time prices were rising.

Jane Fox : 10/11/2007 9:39:36 AM

I see both the DAX, USDJPY and AD volume ratio making new daily lows so the bulls are stumbling and may lose possession of the ball.

Keene Little : 10/11/2007 9:38:35 AM

In fact SPX 1575 and VIX at or below 16 could be a very nice setup. Remember the VIX setup: Link . It's showing bullish divergence at the new low. The pieces are falling into place here.

Linda Piazza : 10/11/2007 9:37:47 AM

There the SPX is again, jammed right up against the rising trendline that marks the top of the rising channel through which it's been climbing off the summer low, and moving a little above it as I type, so it's either breaking out or else piercing it, to be followed by a pullback within the channel again. Which is it? We don't know yet. If the SPX maintains this first 10-minute close over a channel line now at 1566.96 (but climbing), it will be in breakout mode on this chart, but then we don't need any fancy Keltner charts to tell us that momentum is strong. What you might need, if in bullish plays, is some guideline, and I still believe picking out a moving average from which prices typically bounce might be a good way to monitor short-term tenor. Lately, the 10-minute 9-ema has been an average from which the SPX has bounced, but it's still way down at 1563.92. I'll watch later as the action unfolds and see what I note. To maintain the breakout mode on the 10-minute chart, you want 10-minute closes to remain above 1566.96.

Keene Little : 10/11/2007 9:35:47 AM

The other upside target to keep an eye on is SPX 1574.57 that I showed on its 60-min chart, which coincides with the trend line along recent highs. It would be another nice setup for the short side (another probe for a top).

Jane Fox : 10/11/2007 9:33:52 AM

AD line at +413 and is now currently +830. VIX opens below its PDL.

Jane Fox : 10/11/2007 9:26:14 AM

I also suspect the VIX will open below its previous day low.

Jane Fox : 10/11/2007 9:25:23 AM

I suspect the AD line will open above +500 and then quickly climb to above +1000.

Jane Fox : 10/11/2007 9:24:37 AM

Then the NDX is in a world of its own. It is odd how the MACD is not even slowing down here; this is a very bullish chart but still needs to make a retracement. OK I'll get off my soapbox. Link

Jane Fox : 10/11/2007 9:22:13 AM

SPX has the same story as the DOW, it needs to retrace to about its 50EMA and make the handle to this cup. Notice how the MACD is slowing down but not making a bearish divergence. Link

Keene Little : 10/11/2007 9:19:52 AM

I said the bulls need to rally the market this morning in order to save it and I guess others thought the same thing. Equity futures are up strong this morning so now the only thing they need to do is prevent a gap n crap. As part of a choppy move higher we could see a rally from yesterday's low get two equal legs up followed by a sharp pullback and then repeat that one more time. Two equal legs up for ES is at 1581.75 where it's currently trading. Continue to stay cautious here as it could get whippy if we're in a topping process.

Jane Fox : 10/11/2007 9:19:46 AM

Countrywide Financial Corp. (CFC) said its September mortgage loan fundings fell 44% from a year earlier as the company was caught in the middle of the ongoing credit crunch.

The nation's largest mortgage firm said it funded $21 billion in loans last month, with average daily applications dropping 39% to $1.7 billion. The company's pipeline was $42 billion as of Sept. 30, compared with $65 billion a year earlier and $52 billion on Aug. 31.

President and Chief Operating Officer David Sambol said, "September's production volume is reflective of current market conditions and more restrictive underwriting."

Jane Fox : 10/11/2007 9:18:15 AM

WASHINGTON (MarketWatch) - Boosted by a weaker dollar, the U.S. trade gap narrowed to $57.6 billion in August from $59 billion in July, the Commerce Department reported Thursday.

Exports rose 0.4% to a record $138.3 billion, while imports fell 0.4% to $195.9 billion.

In inflation-adjusted terms, the U.S. trade gap fell to its lowest level in more than three years. In real terms, exports rose 0.2%, while imports fell 0.6%.

The improvement in the trade gap was more than expected by economists, who forecast only a slight narrowing to $58.8 billion.

Jane Fox : 10/11/2007 9:17:24 AM

The DOW's needs to fall back to its 50EMA for it to sustain any kind of rally, in other words it needs to make the handle to this cup and those handles are typically a 38.20% retracement of the right side of the cup. Link

Jane Fox : 10/11/2007 9:14:32 AM

The Russell 2000 seems to be consolidating at its October highs suggesting it is just taking a breather before it blasts upward to test yearly highs at 856. Link

Jane Fox : 10/11/2007 9:08:13 AM

Crude up, Gold up and the US$ down - all these markets traded in sync overnight. Link

Jane Fox : 10/11/2007 9:05:55 AM

The markets had a very strong overnight session with only the DOW not been able to break its previous day highs. Link

Jane Fox : 10/11/2007 9:04:46 AM

HONG KONG (MarketWatch) -- The Bank of Japan voted Thursday to keep its key interest rate unchanged, with policymakers deciding they needed more time to assess global credit problems and small businesses' lagging confidence in the world's second-largest economy.

Jane Fox : 10/11/2007 8:59:11 AM

DAteline WSJ - Retailers are posting generally weak same-store-sales figures for September, with many also cutting bottom-line expectations.

But Wal-Mart Stores Inc. raised its fiscal third-quarter earnings outlook despite reporting same-store sales growth at the lower end of its forecast.

Economic conditions and concerns have been a source of trouble, and so has last month's abnormal warmth across large swaths of the country. In addition, many retailers had strong sales gains in September 2006.

A warning by Target Corp. -- which has been one of retail's stronger performers -- two weeks ago didn't help perceptions. Target slashed its September sales-growth outlook by more than half, blaming fewer-than-expected customers.

Linda Piazza : 10/11/2007 8:22:28 AM

The Fed has a whopping $46.00 billion in repos maturing today. I'll check back later and see if any repos are announced.

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