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Jeff Bailey : 10/18/2007 1:59:02 AM

YM 13,982 is up 15 from settlement. Extended session high/low has been 13,982 / 13,944.

Jeff Bailey : 10/18/2007 1:57:47 AM

Out of Office ... I will be away from the MM tomorrow from about 12:00 PM EDT to the close. I will be attending a funeral in Loveland, CO.

Jeff Bailey : 10/18/2007 1:55:09 AM

SNDK PnF chart Link ... I thought bulls should be looking LONG at $51.20 with the SWF-KJ for $4.60 on 10/10/07 here in the MM.

Whack! Downgraded next morning and after seeing a trade at $49.60, thought it better to "cut and run" at $50.60, or $3.80 in the option.

SNDK reports earnings today (Thursday).

PnF chart of SNDK looks to me as if MARKET agrees with analyst call. We'll see.

If the MARKET is WRONG, it will be VERY QUICK to correct itself (look for stocks that gap +/- 7% or more). Sometimes, ANALYSTS will also be quick, but sometimes, it will take MONTHS, or QUARTERS. You know the FUNDAMENTAL analyst loves to tell us "I told you so."

Jeff Bailey : 10/18/2007 1:43:06 AM

Hey ... let's look at the group again tonight. Remember that fundamental analyst on CNBC saying he defined "value" as a stock that traded at, or below 1.5 times sales? For tech, GROSS MARGINS are also important. Now, I recently profiled BULLISH a trade in SNDK. Next day, stock gets downgraded with firm citing "pricing pressure" for flash memory. If true then that would have NEGATIVE impact on SNDK's gross margins. Link

Here's INTC's earnings press release and I note gross margin improved to 52.4% from 46.9% in Q2. Link

Jeff Bailey : 10/18/2007 1:26:09 AM

Here's that SMH component list I posted the morning of 10/12/07 Link

Like other traders, I saw the SMH -2.56% and wanted to see what was going on. "It didn't make sense" as all but BRCM were green.

Jeff Bailey : 10/18/2007 1:23:11 AM

SMH Here's a daily interval bar chart of the SMH Link with notes. Also provides some TESTS.

Jeff Bailey : 10/18/2007 1:07:12 AM

Index Pivot Matrix for Thursday at this Link

Real quick ... I emailed Gregory again tonight regarding his question about buying the SMH. I thought "not until it gets a close above the $37.05-ish level."

So, with some "good news" out of Intel (INTC), the SMH jumps, but can't quite close the deal at the WEEKLY Pivot/MONTHLY S1 correlation ($37.01/$37.03). But just like that, the SMH is % winner for the WEEK, but still rivals the BIX as a % loser for the MONTH! Note !!! In 10/12/07 MM I noted some type of "rebalance" must have taken place to account for what appeared to be a "gap lower" open for the SMH. This I believe skews SMH % change for MONTH.

OK ... the SMH is now our test for STRENGTH! It's got the correlations we want to challenge it with.

Now the QQQQ. Even/flat for the week, % gainer for the MONTH.

Near-term correlation at tomorrow's DAILY Pivot and WEEKLY Pivot. Boom, boom, boom resistance correlations at DAILY R2, WEEKLY R1, MONTHLY R2. Hey! check out today's low in QQQQ/NDX and QQQQ/NDX MONTHLY R1) QQQQ closes at multi-year high, so just like that, overhead supply of stock is limited.

Now the SPY. I'd have to consider DAILY S1 and WEEKLY S2 (discussed in Monday's Wrap) as a "sloppy correlation" as they don't really line up (like QQQQ).

The BIX ... if it can pull off just 1/2 of what the RUT.X did to my/your IWM Oct. $78 Put trade, then that should give the "lift from the bottom" to push the SPY higher.

Keene Little : 10/17/2007 11:52:28 PM

The Investors Intelligence report on Schaeffersresearch.com site from two weeks ago: Link and from today: Link

Do you sense everyone has gone over to one side of the boat and is peering over the side? We have way too many bulls and way too few bears. This is what happens next: Link

Keene Little : 10/17/2007 11:45:11 PM

Thursday's pivot tables: Link and Link

I'm looking for a pullback early on Thursday and then another leg up for the bounce off the Wednesday low. The whole thing might even look like just a consolidation day (typical opex Thursday). For now it's important for the bulls to hold the Wednesday lows.
DOW: Link
SPX: Link
NDX: Link
RUT: Link

Jeff Bailey : 10/17/2007 10:28:31 PM

Well, time to go get a "bite!" Have a gooood evening.

Jeff Bailey : 10/17/2007 10:23:10 PM

iShares Japan (EWJ) ... could change box size to unconventional $0.05 Link

Try and make it "look like" the $NIKK.

I might be too bearish (Permabear Bailey) with revised lower target of $13.50?

EWJ's are gone at $NIKK bullish support trend (16,250) I know that.

Keene Little : 10/17/2007 10:20:07 PM

My gold short (December YG) was stopped at 766. I may have had the stop a little too close but that's OK. I'd prefer that than let it go against me. Now I'm watching the downtrend line from Monday (all-hours), currently near 767.50.

Not everyone watches the MM at night, much less trades at night, but if you are interested, watch that downtrend line to see if price holds at or below that level to try a short again. Trading is much less liquid in overnight trading and you need to use conditional orders for your stops so it's not an easy time to trade. I'll review the setup again tomorrow morning when everyone is back at their trading desks. It'll also be an opportunity to see how the US dollar and oil trade overnight.

Jeff Bailey : 10/17/2007 10:14:04 PM

Nikkei-225 ($NIKK) Link ... currently up 137 points, or +0.81% at 17,092.

Session Low/High has been 16,975/17,112

Jeff Bailey : 10/17/2007 10:11:04 PM

Forex Currencies (screen capture) at 09:55:48 PM EDT Link ... USD weak against the JPY looks to be the culprit of gold's strength.

OI Technical Staff : 10/17/2007 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 : 10/17/2007 9:49:43 PM

December Gold (yg07z) Alert! 766.00

Jeff Bailey : 10/17/2007 8:13:44 PM

DJ- China may allow arbitrage between stocks of companies that have dual listings on the mainland and in Hong Kong, Bloomberg reported Wednesday, citing China Securities Regulatory Commission Vice Chairman Tu Guangshao. Tu was cited as saying Beijing is studying a proposal to allow swaps in shares of companies traded on domestic and Hong Kong exchanges. "We will announce the result of the study soon," he was quoted as saying in the report.

Jeff Bailey : 10/17/2007 8:12:29 PM

CNBC ... listening in, but sounds like Hang Seng listed stocks may be available in Shang Hai, thus the "surge" in Hang Seng listed stocks.

Jeff Bailey : 10/17/2007 8:07:43 PM

Keene! I didn't open that last email you sent me. The file attached had a virus associated with it.

Check your computer quick!

Jeff Bailey : 10/17/2007 6:23:31 PM

MM Tip! ... Did you know ...

Most subscribers/traders that follow my trade signals will "search" for my alerts and MM Profile updates using the ...

Ctrl and F key on their keyboard.

Simply "left click" your mouse in the MM screen ...

then hold down the Ctrl key and the F key at the same time.

A Find "popup box" should appear and you can type in key words like ...

Day trade (look for any day trades profiled)
Swing trade (look for any swing trades profiled)
Current Open MM Profiles (look for current OPEN MM profile updates)

Jeff Bailey : 10/17/2007 6:07:09 PM

Email Question: ... Jeff, do you post summaries of your swing trade alerts somewhere? I would like follow them. For example, this am alert for IWM Put. Was that a long the $78 put? If so, what date and price? Is your alert this am saying look to get out at $0.25 cents? Thanks

Jeff's Response ... Yes! When you see Current OPEN MM Profiles that is a quick review/display of OPEN MM Profiles that I (Jeff Bailey) have made and am FOLLOWING!

The IWM Put was initiated (Pos Date) on 09/17/07 when the IWM itself was trading $77.30. Now, the one (1) (# shares) IWM Oct $78 Put (IOW-VZ) was purchased for $3.40/contract.

With just two (2) days until expiration, and that option out-the-money, I'm trying to salvage what I can.

Jeff Bailey : 10/17/2007 5:55:45 PM

HK Shares Gain In Sideways Trade ... Reuters Story from this morning Link

Does mention PTR

Jeff Bailey : 10/17/2007 5:50:40 PM

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

In "Watch List" I'm noting difference between US-based XOM and China-based PTR and CEO. There was some type of "news" today regarding China's government and more open investment. That has to be a reason for the great disparity.

Jeff Bailey : 10/17/2007 4:53:30 PM

EIA's This Week In Petroleum Link

Jeff Bailey : 10/17/2007 4:51:33 PM

MBA's Weekly Application Survey: at this Link

Jane Fox : 10/17/2007 4:21:53 PM

Economic Reports out tomorrow include:

8:30a.m. Initial Jobless Claims For Oct 13 Wk. Expected: +7K. Previous: -12K.

10:00a.m. Sep Leading Economic Indicators. Expected: +0.3%. Previous: -0.6%.

12:00p.m. Oct Philadelphia Fed Business Index. Expected: 8.0. Previous: 10.9.

Jeff Bailey : 10/17/2007 4:08:15 PM

Wow! What a day.

Jeff Bailey : 10/17/2007 4:06:29 PM

Good trading Jane!

Jeff Bailey : 10/17/2007 4:06:01 PM

Selling long a YM from 13,910 here. Just shy of DAILY Pivot and 61.8% dynamic.

YM 13,965 here.

Keene Little : 10/17/2007 4:05:48 PM

Today certainly fulfilled the expectation that we'd see a volatile day. It's always hard to figure out whether price moves this week are more associated with opex or something else. Certainly opex will tend to exaggerate some of the moves. We're finishing the day with the DOW up near resistance after a 5-wave move up off the low. I expect a pullback tomorrow morning but that should then be followed by another leg up. After that 3-wave move up we'll then get to see whether we've got the bulls or the bears in the driver's seat (or maybe noone?).

Jeff Bailey : 10/17/2007 3:49:08 PM

VIX.X 19.31 -3.54% ...

Jeff Bailey : 10/17/2007 3:44:43 PM

Somewhat encouraging to see SPY come back, test WEEKLY S2 and rebound on the re-test.

Linda Piazza : 10/17/2007 3:40:04 PM

I've got to leave early this afternoon. I'm leaving with the SPX caught between the 45-ema (1537.83) and the 9-ema's support 1534.70. If you're in a bearish position, just adhere to the stop decisions you made earlier in the day, in calmer times.

Linda Piazza : 10/17/2007 3:32:05 PM

So far, the 10-minute 45-ema continues to hold as resistance on the SPX's 10-minute closes, with that average at 1537 currently (about 717.90 on the OEX), but neither the SPX nor the OEX has given up trying to breach it yet.

Jane Fox : 10/17/2007 3:24:26 PM

Full profit at 13938 has now been reached.

Linda Piazza : 10/17/2007 3:22:27 PM

Obviously, when I began typing the 3:19:11 post, the SPX had not yet exceeded the 45-ema, but it had by the time I finished typing it. That's why there were the confusing references to the SPX's position above or below it. If I change the post, the time stamp changes, and I don't want to do that. The SPX has now pulled back and closed the 10-minute period beneath the 45-sma, so it did not reset its target to a higher level. It's still testing, testing, though.

Keene Little : 10/17/2007 3:22:09 PM

The DOW's broken uptrend line from August is at 13900. Century mark and broken uptrend line will likely be tough resistance this afternoon. Even if we're going to get just a correction of the today's decline I think it will take more time than this bounce off the low. So a pullback and another push higher would be typical.

Linda Piazza : 10/17/2007 3:19:11 PM

This is why I suggested in my 2:04:08 post that you make sure that your stops were set on bearish positions so that you maintained some profit and not just break even as the 1527-ish support was being tested. A breakdown would have signaled that the bottom of the channel on the daily chart could be tested, but that breakdown did not occur.

As I type, the SPX has not yet risen quite to the 45-ema on the 10-minute chart, with that at 1538.08, perhaps serving as resistance on 10-minute closes. It has most of this week, other than this morning's strong and soon-to-be-reversed early push. You can't count on it holding now--so don't hold onto a bearish play longer than you should if your play has hit its stop--but it's held most of the week. We're about to see if it will this time. It's been exceeded but the 10-minute period hasn't closed. The analogous level on the OEX is 717.94.

Unless there's a pullback soon, this action will reset upside targets to 1543.91 on the SPX and 720.27 on the OEX.

Jeff Bailey : 10/17/2007 3:17:03 PM

The SYH-KX are $3.20 offer.

Jeff Bailey : 10/17/2007 3:15:20 PM

TRAN 4,862 +0.60% ...

Jeff Bailey : 10/17/2007 3:14:58 PM

BIX.X 345.28 -1.24% ...

Jane Fox : 10/17/2007 3:13:22 PM

THe long from 13895 has reached 13934 and within 4 ticks of full profit at 13938. YOu can wait for those extra ticks or take your profits here.

Jeff Bailey : 10/17/2007 3:12:57 PM

VIX.X 19.32 -3.49% ...

Jeff Bailey : 10/17/2007 3:12:34 PM

Swing trade call alert! ... for one (1) of the S&P Depository Receipt SPY Nov. $153 Calls (SYH-KW) at the offer of $3.70.

SPY $153.41

Keene Little : 10/17/2007 3:09:12 PM

Gold has now broken its uptrend line from October 4th which should be the signal that that leg up is finished, and that leg should have been the last leg of the rally from August. I'm getting more comfortable with my short position in gold (and oil). If short gold I'd now lower the stop to 766, just above this morning's bounce high).

Jeff Bailey : 10/17/2007 3:09:11 PM

BGC $77.63 +2.52% ... busts a move.

Keene Little : 10/17/2007 3:06:25 PM

Now getting above the last high near 1:30 PM so that should be the signal that the low is in. Now it will become important how the bounce develops from here. If the bounce fails (such as at the broken uptrend lines) and then heads for new lows that would be a very strong longer term sell signal.

But if the rally becomes impulsive and can break above the tops of the descending wedges (the downtrend lines from last week) then it will be just as strong a buy signal for the bulls since new all-time highs could be on the way. If that happens then October 17th (a turn date) could mark a low instead of a high. We'll have to wait for at least another day or two (or more) before we get an answer to this question.

Linda Piazza : 10/17/2007 3:03:46 PM

Denise had pointed out that in my 2:38:11 post, I typed "OEX" when I meant "SPX." I'm afraid that I'm probably going to do that about once or twice a day now that I've been asked by a reader or two to include comments about the OEX, too. I've since made another post about the OEX, but here's what the 30-minute and 10-minute charts show:

The OEX's bottom channel support is now 712.08, but whether we could now consider that a target is a bit iffy, as the OEX will likely close this 30-minute period above resistance at 715.11, before I finish typing. Yep, just did. I'd prefer to look at the 10-minute chart, however, since the breakdown status has been erased there. That shows an upside target near 717 just being approached, with further resistance at 717.87 on 10-minute closes. Other than this morning's early morning breakout, this (45-ema) has been strong resistance this week when tested. If the OEX breaks above that on 10-minute closes, then the next upside target is 720.29.

Jeff Bailey : 10/17/2007 3:02:09 PM

Earnings Roundup: ... AP Story Link

Jeff Bailey : 10/17/2007 2:59:02 PM

PBT $15.55 -0.70% ...

Jeff Bailey : 10/17/2007 2:58:27 PM

A "trap" or a "crrrr..."

Jeff Bailey : 10/17/2007 2:57:56 PM

US Oil Fund (USO) $66.52 -0.68% ... undercuts morning low.

Jeff Bailey : 10/17/2007 2:56:34 PM

Altria (MO) $70.92 +0.25% ... #7 weighting in INDU/DIA/YM

Jeff Bailey : 10/17/2007 2:54:47 PM

Look for YM strength above QCharts' WKLY S2 13,901. Say ... 13,910.

Jeff Bailey : 10/17/2007 2:53:06 PM

IBM $116.74 -2.39% now.

Linda Piazza : 10/17/2007 2:52:53 PM

The OEX closed the last 10-minute period just above its 9-ema, as did the SPX. It may be time for a top-of-the-channel test on the OEX's smallest nested Keltner channel, although the 10-minute close wasn't convincingly cleared of the 9-ema's resistance so that's far from certain. The top of that channel is now at 716.70 with further resistance at 717.91 on 10-minute closes. For the SPX, the numbers are 1534.98 with further resistance at 1538.05. Bears would prefer that both just roll over here.

Jeff Bailey : 10/17/2007 2:51:28 PM

Not a bad idea Jane!

Jane Fox : 10/17/2007 2:50:33 PM

Long at 13895 has triggered and if you took the long put your stop at 13854 and your limit at 13938.

Jeff Bailey : 10/17/2007 2:50:24 PM

Speaking of position size and account management ... Anyone thinking what I'm thinking as BIX.X approaches it recent lows? December Fed Funds futures ticking back higher (potential rate cut) into Friday's expiration?

See 08/16/07 MM 03:44:25 Link

Keene Little : 10/17/2007 2:48:41 PM

Two equal legs up (for equality in an a-b-c bounce off the low) is at ES 1542.25 and its previous high is at 1544. Watch for potential resistance in this area.

Linda Piazza : 10/17/2007 2:38:11 PM

SPX 30-minute downside target and potential support is now 1526.42 on 30-minute closes. There could, of course, be a breakdown in that chart, too, but that's how it's set up now. The breakout status on the 10-minute chart has been erased, so we'll go back to that one. Bears now want to see 10-minute closes remain below the 9-ema now at 1531.12 and they want to see the OEX break back below 1527.40 on a ten-minute close to create a new breakdown situation. What do I think? I think there's bounce potential, but until something strong gets started, startled bulls are likely to start bailing again.

Keene Little : 10/17/2007 2:35:41 PM

With a 5-wave move down today (if it's completed) we should get at least a correction of it so scalping a long could work nicely. I'm talking about the larger pattern when I say I'm not seeing enough evidence to entice me into a long play here. As I see it, the risk is to the downside.

Keene Little : 10/17/2007 2:33:50 PM

For the descending wedge pattern that I've been showing on the SPX 60-min chart we should be seeing lots of bullish divergences at these new lows, especially today's against yesterday's. This is hinting that the descending wedge pattern is in fact Not the correct interpretation and that instead we're in the middle of what could be a very strong decline. I am not anxious to test the long side without those bullish divergences.

Jane Fox : 10/17/2007 2:30:38 PM

I see another long setting up at 13896 with a stop at 13854. I see nothing in the internals that are telling me have seen a bottom but reactionary bounces can be lurcrative.

Keene Little : 10/17/2007 2:26:38 PM

The little bounce off the low is questionable. It's still looking a little corrective and could lead to yet another new low. A rally back above its last bounce high just after 1:30 PM would tell me the low for the day is in.

Jeff Bailey : 10/17/2007 2:26:31 PM

I need to shut down and reboot computer and servers. Back in a few.

Linda Piazza : 10/17/2007 2:20:37 PM

Iffy time here, so be careful with your profits if in bearish plays. On the 30-minute SPX Keltner chart, 1526.50 support holds on 30-minute closes. So far. On the 15-minute chart, resistance at 1531.01 has held on 15-minute closes. Next resistance is the 9-ema, speeding lower and now at 1533.14.

Tab Gilles : 10/17/2007 2:15:01 PM

Beige Book Report Is the Fed going to cut on Oct. 31st? Link

Jeff Bailey : 10/17/2007 2:12:29 PM

SPY $152.92 -0.55% ...

VIX.X 19.94 -0.39% ...

Tab Gilles : 10/17/2007 2:12:12 PM

Weekly EIA Report Link

Keene Little : 10/17/2007 2:07:07 PM

SPX hit its downside Fib target but the DOW hasn't yet. Looking for bullish divergences since regardless of the larger pattern the 5-wave move down today should get corrected so at least a larger bounce should be right around the corner.

Jeff Bailey : 10/17/2007 2:06:30 PM

Student Loan Corp. (STU) $171.48 -5.32% ... darts lower

Jeff Bailey : 10/17/2007 2:04:56 PM

Fed Beige Book (Prior to 10/05/2007) Link

Linda Piazza : 10/17/2007 2:04:08 PM

Breakdown on the SPX 10- and 15-minute Keltner charts, so I rolled up to the 30-minute one to get the next target and see that the SPX is sitting on it right now, just a few cents below the SPX's current 1526.92 level. Another sign that this 1527-ish zone could be support, but not a guarantee that it is. Just ratchet down your stops and, by now, you should be making sure that you come away with some profits and not just break even.

Jeff Bailey : 10/17/2007 2:03:21 PM

To steal a phrase ... One way to not go "too far out on a limb and have it break" is utilize position size. Very important in account management and team management.

Linda Piazza : 10/17/2007 2:02:14 PM

Here's advice now for both short-term and longer-term SPX bears. The current 1527-ish level is potential support, so you should of course be lowering stops as the SPX drops, but I want you to think about something else. If the SPX continues dropping hard, it's possible that 1520-1522 could be tested. This will be the bottom support of the channel through which the SPX has been climbing off the summertime low. While it's entirely possible that the SPX could break through that trendline (the corrective fan theory suggests that the rally off the summertime low may have ended and it may be time for another disorganized period or even a new downtrend, however long or short-lived that might be), that level could produce a bounce attempt. If you'd bought the last touch of that channel line, you'd be a happy bull and perhaps more than willing to try it again. So if in any bearish play, short- or long-term, certainly at the very least ratchet down your stops as that level is approached and maybe even think about taking partial profits. If you're an conservative bear, you might even take automatic full profits unless the SPX just plowed through that level, and then wait out to the test to see if a new entry was warranted. That was a tactic that I often used to employ.

Jeff Bailey : 10/17/2007 1:59:25 PM

Swing trade short alert! ... for 1/2 position in shares of Amerco (UHAL) at the bid of $61.71. Stop $65.00, target $55.00.

Jane Fox : 10/17/2007 1:58:42 PM

Well certainly glad we didn't get long at 13911 for we would have been stopped. Odd odd market today.

Jeff Bailey : 10/17/2007 1:58:31 PM

A heck ... what's another trade to follow!

Keene Little : 10/17/2007 1:57:33 PM

The bearish side of this price action is that today's initial rally completed a 2nd wave correction as I showed earlier on the SPX 60-min chart. That would place us in the 3rd of a 3rd wave down and it will be a screamer if that's the correct wave count. So be very careful about trying to buy this dip. I want to see lots of bullish divergences before stepping in front of this southbound train. Link

Jeff Bailey : 10/17/2007 1:57:29 PM

Oil Reverses Course, Hits New Record ... AP Story (Turkey update) Link

Jeff Bailey : 10/17/2007 1:55:51 PM

Amerco (UHAL) $61.72 -1.59% ... looks vulnerable to recent lows.

Linda Piazza : 10/17/2007 1:55:22 PM

Unless the SPX is going to break down out of its Keltner channels on the 10-minute channels, a possibility and perhaps now an increasingly likely possibility, it will soon be time for another bounce attempt. If so, bears want to see the 9-ema at 1533.34 continue to provide resistance on 10-minute closes.

Keene Little : 10/17/2007 1:53:39 PM

The same kind of downside projection for today's move that I gave for SPX (for its 5th wave down today) would take the DOW down to 13751. The first downside target is at 13788 (SPX 1529.81) where the 5th wave = 62% of the 1st wave.

Jeff Bailey : 10/17/2007 1:53:39 PM

Intercontinental Exchange (ICE) $156.92 +0.97% ... reversing losses to $155.25. Sold long the IHH-KN for 34.78% gain at $161.39 benchmark.

Linda Piazza : 10/17/2007 1:52:18 PM

SPX target and potential support is now at 1528.97 with other support about a point above that and being tested now. For the OEX, the target is 713.20 with further support at 714.46. The OEX hasn't been meeting these targets, which are, in fact, potential targets only.

Jeff Bailey : 10/17/2007 1:50:46 PM

At last night's close, SYH-KW were $4.05. SYH-KX were $3.50.

Jeff Bailey : 10/17/2007 1:49:17 PM

EWJ $14.08 -0.07% ... understand this trade, adjustment made in MM Profiles as it relates to potential SPY Nov. call trade.

How about them Rockies! What a job by manager Clint Hurdle and all the players. Each have played an important role as the first team in history to sweep their way to the World Series.

Jeff Bailey : 10/17/2007 1:45:46 PM

Per Monday's Market Wrap and SPY call trade setup ...

With SPX/SPY at "best bull entry" levels, I now want to see the VIX.X spike to WEEKLY S2.

Then, and ONLY then, do I monitor, here in the MM, and make the decision to go long.

IF VIX.X were to continue to surge past WEEKLY R2, then there could be trouble.

Keene Little : 10/17/2007 1:44:51 PM

SPX 1525 looks like it could be a good downside target (or something just above that). In fact if the 5th wave down equals the 1st wave (assuming this little bounce is finished) it will get to 1526.60.

Keene Little : 10/17/2007 1:43:09 PM

The pattern of the decline from this morning's high would actually look best with another minor new low to give us a cleaner 5-wave move down to finish the move.

Jeff Bailey : 10/17/2007 1:41:41 PM

YM 13,896

Jeff Bailey : 10/17/2007 1:41:15 PM

IBM $116.38

Jane Fox : 10/17/2007 1:40:14 PM

If you think the market has found a bottom I see a long at YM 13911 with a stop just under daily lows. Not sure if I will take it because I am not reading the market well today.

Jeff Bailey : 10/17/2007 1:39:33 PM

Wells Fargo (WFC) $34.04 -1.47% ... Lehman and RBC Capital reiterated their respective "overweight" and "outperform" ratings this morning.

Jane Fox : 10/17/2007 1:38:26 PM

Actually it was the 3 internals I rely on the most lead be astray because I put a lot of emphasis on the AD line. How many days do you see this internal go from +1550 to under 0? Not many.

Jane Fox : 10/17/2007 1:36:05 PM

I find it quite interesting that the 2 internals I rely on the most, the VIX and AD volume, lead me astray today. The other three, which have been bearish all day, were the ones to watch.

Jeff Bailey : 10/17/2007 1:30:45 PM

XLF $33.72 -1.31% ... sold long at $35.60 benchmark and XLF-KI for 17.95% gain.

Jeff Bailey : 10/17/2007 1:29:38 PM

NVR $405.92 -5.91% ... sold long for 1.8% gain at $486.

Jeff Bailey : 10/17/2007 1:28:41 PM

DJUSHB 345.06 -2.27% ...

Jeff Bailey : 10/17/2007 1:28:17 PM

BIX.X 343.23 -1.83% ...

Jeff Bailey : 10/17/2007 1:27:57 PM

Pacholder High Yield (PHF) $9.10 -0.54% ...

Jeff Bailey : 10/17/2007 1:27:10 PM

10-year Yield ($TNX.X) down 10.3 bp at 4.552%

Jeff Bailey : 10/17/2007 1:26:11 PM

December Fed Funds Futures (ff07z) alert! 95.48 +0.05% ... see Monday's Market Wrap chart Link

Keene Little : 10/17/2007 1:24:46 PM

The DOW obviously broke its uptrend line from August but notice that it has now done a throw-under below the bottom of its potential descending wedge, currently near 13832: Link . If it rallies back up inside the pattern that would be a buy signal. It would then have to rally above the top of its wedge, near 13950 and get back above its broken uptrend line (vs. a failed retest), to give us a confirmed buy signal. But bears beware here of the possible bullish setup.

Linda Piazza : 10/17/2007 1:23:11 PM

OEX bears: 10-minute 9-ema is now 717.59. You'd prefer those 10-minute closes to remain below 716.22, however. Downside target has been reset to 713.57. As is often true when big caps are valued more than others, the OEX is outperforming the SPX just a tad with respect to these Keltner lines, however, not quite hitting the downside targets at times.

Linda Piazza : 10/17/2007 1:21:46 PM

You know the drill now: SPX 10-minute 9-ema is now at 1537.10 but bears would prefer that 10-minute closes remain below 1534.63. Potential target has now been pushed down to 1529.87.

Jeff Bailey : 10/17/2007 1:20:44 PM

VIX.X 19.55 -2.34% ...

Jeff Bailey : 10/17/2007 1:18:38 PM

Citigroup (C) $44.05 -1.62% ... that's a new 52-weeker. Today's trade at $44.00 generates a triple-bottom sell signal.

Jeff Bailey : 10/17/2007 1:16:14 PM

Look at that volatility in the PTR-WL ... $1.10 x $1.60.

PTR $255.49 +10.98% ...

Jeff Bailey : 10/17/2007 1:14:36 PM

Swing trade put adjust/lower target alert ... for the iShares Japan EWJ Nov $15 Puts (EWJ-WO) ... to $13.50 in the underlying.

EWJ $14.08 -0.07% ...

Jane Fox : 10/17/2007 1:13:44 PM

The VIX is now following the S&P futures and making new daily highs. This does happen often but occasionally it will and today is one of those days.

Linda Piazza : 10/17/2007 1:13:27 PM

The SPX reset its potential downside target and support and headed right down toward it. It's reset now to the SPX's current 1530.21 level. On the OEX, it's 713.70 currently. Guard profits at this juncture as, unless there's going to be a breakdown, always a possibility, this should be strong support. Not strong enough to encourage bulls to enter, however. As I said last night in my Wrap, as long as the SPX is rolling down from that trendline off the summer lows, I feel selling the rallies is the right tactic.

Keene Little : 10/17/2007 1:12:45 PM

I've been watching for where a top could occur in oil. The last one at 82.21 on Sept 28th was a good setup because of the Fib projection there (A = C in the A-B-C bounce off the January low) and was the last time I had recommended a short play on oil. This is the daily chart of the oil contract (December contract which is not the front month): Link

After a quick pullback it then continued its rally and would have stopped out anyone who took my short recommendation for a profit as it broke a small uptrend line (a rally back above 81.00 should have kicked you out): Link . There were some MM comments at the time that it was a foolish play because of the apparent short squeeze rally but the Fib projection at 82.21 was a good setup and it was a good trade and the right place to stop out. It's an example of how I like to play what I think could be the top.

So I've been watching for what could be developing in its pattern. I showed the USO chart earlier and the same wave count for oil shows a similar setup. On the daily chart it shows a Fib projection for the 5th wave where it will achieve equality at 88.15. It doesn't mean it will get there, or stop there, but with oscillators in overbought as it nears this Fib target that's where I'm looking for a potential top in oil's rally.

Jane Fox : 10/17/2007 1:11:34 PM

Russell 2000 is breaking its support but like I said this morning I am not too worried about it, however, a close below the 50EMA will have me wondering. You did know the primary purpose of the markets is to make both bulls and bears worry. Link

Linda Piazza : 10/17/2007 1:06:02 PM

OEX traders: the OEX didn't quite hit its new downside target (716.54) but is bouncing with the SPX. OEX bears want the SPX to find resistance on 10-minute closes beneath the 9-ema at 719.02 and would prefer beneath the line now at 718.24. Ten-minute closes beneath the Keltner line now at 761.54 resets the potential downside target and support to 713.94. Ditto the advice to short-term OEX bears. Don't let a profitable play get away from you. Set stops to breakeven at least.

Linda Piazza : 10/17/2007 1:03:49 PM

Potential Keltner support (and target) hit on the SPX and almost hit on the OEX, and the bounce attempt begins. If a bounce attempt succeeds, bears want bounces to be stopped on 10-minute closes at 1539.83 and would prefer them stopped lower, at 1538.17. A 10-minute close beneath about 1535.65 would set a new downside target and potential support at 1530.67. Short-term bears, don't let a profitable play get away from you, however. Set your stops to breakeven at the very least.

Jane Fox : 10/17/2007 1:03:24 PM

I would not be trying to short Crude until I get a confirmation that it is darn good and ready to start a retracement. These charts are telling me that it is NOT ready yet. Link

Jeff Bailey : 10/17/2007 1:02:33 PM

SMH Option Montage at this Link

$37.50 looking a little bit like "Max Pain" for October.

Jane Fox : 10/17/2007 12:59:59 PM

AD line has fallen to -149. I have totally read the market wrong today.

Linda Piazza : 10/17/2007 12:58:02 PM

Once the SPX hits its 1535.58 (current) downside target, if it does, consider what you'll do if in a short-term bearish play. I'd at least set my stop to breakeven if nothing else. If you're in a longer-term bearish play, you probably have your stop set somewhere just above that rising trendline off the summer's low.

Jeff Bailey : 10/17/2007 12:54:27 PM

Will note SMH's daily interval bar chart has rising 150-day SMA at $37.21.

Jeff Bailey : 10/17/2007 12:52:47 PM

SMH $36.85 +1.90% ... still sellers where pivot analysis traders thought there would be.

Keene Little : 10/17/2007 12:52:17 PM

Speaking of short interest on gold, the COT report shows a huge shift in the commercials to a net short position while non-commercials maintain a net long position. The last time this kind of difference was seen was May 2006 which marked the high in gold. It's usually not wise to bet against the commercials.

Linda Piazza : 10/17/2007 12:49:25 PM

Analogous levels for the OEX (following up on my 12:47:26 post) are that as long as the OEX continues printing 10-minute closes beneath the 9-ema, currently at about 720.10 and especially as long as it produces 10-minute closes beneath a line currently at 719.25, it maintains a potential downside target of 716.67. Neither of these proves that the target will be hit, but those are the potential downside targets.

Jeff Bailey : 10/17/2007 12:49:24 PM

GLD short interest 4.1 million on 9/28/07, up a notable 1.39 million from 9/14/07. Link

Linda Piazza : 10/17/2007 12:47:26 PM

As long as the SPX continues producing 10-minute closes below the 9-ema, currently at 1542.01 and especially as long as it continues producing 10-minute closes beneath a line currently at 1540.42, it maintains a potential downside target of 1535.69.

Jeff Bailey : 10/17/2007 12:47:12 PM

USO Short Interest as of 09/28/07 was 4.58 million. Down a tad from 09/14/07 4.65 Link

Jane Fox : 10/17/2007 12:47:08 PM

To say this has been a strange day would be an understatement. Link

Keene Little : 10/17/2007 12:40:04 PM

So far the pattern of a post-INTC pop n drop has happened again. It's actually a very reliable pattern.

Keene Little : 10/17/2007 12:37:15 PM

SPX has now closed its gap.

Keene Little : 10/17/2007 12:34:24 PM

On my 30-min chart of the DOW the uptrend line from August actually looks a little closer to current price--about 13893.

Jeff Bailey : 10/17/2007 12:34:07 PM

INTC $26.54 +4.16% ... #29 weighted INDU/DIA/YM component.

JPM $46.75 +3.59% ... #18.

Jeff Bailey : 10/17/2007 12:32:49 PM

IBM $116.69 -2.43% ... #1 weighted INDU/DIA/YM component.

UTX $75.98 -4.60% ... #6.

Linda Piazza : 10/17/2007 12:31:39 PM

The USDJPY has dropped through the 116.70-116.80 zone and is now at 116.53.

Jeff Bailey : 10/17/2007 12:30:04 PM

On 10/08/07, the USO closed $79.02.

PTR closed $181.62.

Keene Little : 10/17/2007 12:28:46 PM

The uptrend line from August for the DOW is now near 13885, about another 15 points lower.

Linda Piazza : 10/17/2007 12:28:31 PM

I've returned to find that the SPX has perhaps just produced a lower high and is currently running down to retest the day's low and the gap zone from this morning. On a Keltner basis, support now looks weaker than resistance, with resistance lines threaded above the SPX's current 1542.34 level. That SPX level is just cents above potential Keltner support. Keltners suggest that as long as the SPX is producing 15-minute closes below about 1543.75, it's setting a downside target of 1535.87. Oops, the SPX dropped a bit while I was typing.

Jeff Bailey : 10/17/2007 12:26:47 PM

Reminder: NYMEX November Crude expires on Monday, 10/22/07.

Jeff Bailey : 10/17/2007 12:25:31 PM

That's what my thinking too Keene on 10/08/07.

PTR-WL $0.65 x $0.95 as I type.

Jeff Bailey : 10/17/2007 12:23:38 PM

Apache (APA) $96.20 -0.58% ... a "potentiall bearish" play that was discussed a couple of weeks ago around $90 if I remember. It was another 52-week high yesterday (see below).

More of a Nat. Gas play.

Equities "should lead" the commodity price action up/down.

Keene Little : 10/17/2007 12:22:18 PM

Haven't checked on that Jeff (USO availability to short). My guess is it would be easier to buy some puts on the oil stocks or short QM (the oil e-mini). QM can be risky if you don't stay very disciplined about risk management. If you haven't done a lot of futures trading and proven to yourself that you can control your emotions and risk management I strongly suggest you not trade QM.

Jeff Bailey : 10/17/2007 12:21:08 PM

OIX 835.17 -0.55% ...

Jeff Bailey : 10/17/2007 12:20:29 PM

TRAN 4,888 +1.13% ...

Jeff Bailey : 10/17/2007 12:19:31 PM

The reason I said "oil and gold" the toughest short around is observations made in MM at the last couple of "tops" in oil and gold. I'd smile, or wink, but it has been painful for some.

Jeff Bailey : 10/17/2007 12:15:19 PM

Keene! Any update on availability of USO for short? Whole thing was short much lower as I remember. Might check GLD too.

Keene Little : 10/17/2007 12:13:46 PM

Keene im looking for a top in oil. Im looking at the USO XLE OIH for some put positions. At what levels would you see the start of a decline?

Jeff's only partially right when he says oil and gold are tough to short right now. I'd add equities to that (smile). But oil is at a place where I'm seriously thinking about a top here. If gold is topping then it would be fitting for oil to be topping as well (and the US dollar bottoming). The daily chart of USO shows an interesting short play setup: Link

Price has reached the top of a parallel up-channel for price action since the August low. It hit a Fib projection for the 5th wave at 67.49 (wave-(v) which ends wave-C which ends the larger wave-(b) rally from January). Will it top out here? Only time will tell but this is the setup.

It takes a drop below 64.25 to confirm the likelihood of a high and a conservative way to short USO would be to wait for a break of its uptrend line, hope for a retest and short the failure. If you want to take a stab at it here, a short against this morning's 67.84 high keeps your stop nice and tight.

Jeff Bailey : 10/17/2007 11:58:23 AM

Next to oil, gold probably the toughest short around.

Jeff Bailey : 10/17/2007 11:57:23 AM

Good gravy! ... USO $67.54 +0.83% ... session low $66.49.

Jeff Bailey : 10/17/2007 11:55:51 AM

TRINQ 0.54 -57.81% ... "Intel inside"...

Keene Little : 10/17/2007 11:55:49 AM

Yesterday I had recommended a gold short against the 772.00 high and that's still my recommendation as I like the setup. But I'd keep your stop a little tighter right now because of the potential sideways triangle (continuation) pattern that appears to be playing out since Monday's high.

This is an all-hours chart of YG (gold e-mini) and I pulled my stop down to 770.50 since a break above that level would likely have gold heading to a new high (and likely its last since it would be coming out of a triangle): Link . A break below 758.2, Tuesday's low, is needed to confirm the top is in.

Jeff Bailey : 10/17/2007 11:53:38 AM

Daily / Weekly / Monthly Index Pivot Matrix at this Link

Observe how TRIN reflects action in equity indexes. Remember Gregory, TRIN is ONLY NYSE relative though. Due to horizontal limitations, I post TRIN as NYSE is more institutionally held.

Remember that for most part, major equity indices all gapped higher at open, likely stopping out yesterday's "short, stop above high" retail trade.

Jeff Bailey : 10/17/2007 11:46:16 AM

SMH $37.02 +2.37% ... per MM subscriber question and my reply. Now we observe some pressure building.

WKLY Pivot and MONTHLY S1.

Keene Little : 10/17/2007 11:42:58 AM

If the DOW drops down a little lower it could now find support at its uptrend line from August, currently near 13890. It could be a battle between the trend lines (its downtrend line is now near 13985) so play the break and expect chop in between: Link

There was a bullish divergence at yesterday afternoon's low but so far MACD hasn't been able to get above zero and therefore remains bearish until it can do so. In fact coming up to the zero line and then rolling back over would be bearish. Think of a whale coming up for air before a big dive.

Jeff Bailey : 10/17/2007 11:33:20 AM

Procter & Gamble Prices EUR1.1B 10-Yr Bond At 99.229

Jeff Bailey : 10/17/2007 11:20:07 AM

Link for Mortgage Banker's Weekly Application Survey not working this morning. Will post when available.

Jane Fox : 10/17/2007 11:19:56 AM

This in from a MM subscriber; "First thing I thought of when you mentioned being out on a limb was 'Watch out for tree trimmers'"

Jeff Bailey : 10/17/2007 11:17:16 AM

BIIIIG bid in Treasuries across the curve this morning.

Jeff Bailey : 10/17/2007 11:15:28 AM

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

CLOSED the GG-AZ at bid of $2.70 when GG traded $31.85.

CLOSED the PBT when it traded $15.65.

Jane Fox : 10/17/2007 11:08:53 AM

Well so much for putting myself out on a limb today; it is getting sawed of very nicely isn't it?

Jane Fox : 10/17/2007 11:06:16 AM

The mid caps are also showing us a very good level of support. Link

Jeff Bailey : 10/17/2007 11:02:44 AM

Swing trade call stopped alert! with GG trading $31.85, stopped on the GG Jan $32.50 Call (GG-AZ) at the bid of $2.70.

Jeff Bailey : 10/17/2007 10:50:44 AM

Yesterday's Sector NH/NL observations at this Link

Banks 52-week high ... HDB, IBN, KHD, SFBC, STT
Banks 52-week low ... ASRV, BTFG, CAC, CACB, CLFC, CMA, CORS, CPF, CSFL, FBC, FCZA, FITB, GBTB, HWBK, JAXB, KEY, NCC, NKSH, NRIM, RF, SBKC, SMMF, SSBX, STI, TMCV, UCBI, UMPQ, WAL, ZION
Building 52-week high ... HINT, STRL
Building 52-week low ... AYI, BLDR, BXC, CAV, GLYT, IIIN, IPII, MAS, NCS, NVR, SPF, TOA, WSO
Oil 52-week high ... APA, APC, ATPG, BRY, BZP, CHK, CLNE, CLR, CXO, DNR, DVN, HES, KWK, MARPS, MUR, OIL, OXY, PWI, UPL, XOM, XTO
Oil 52-week low ... BDCO, KOG
Retailing 52-week high ... LULU
Retailing 52-week low ... BGFV, CHS, CMRG, DSW, GMTN, HVT, JCP, JWN, MOVI, NTRI, PSS, RAD, RVI, SMRT, TA, TLB, TUES, WAG
Transport/Non Air 52-week high ... ANW, DRYS, EGLE, ESEA, EXM, KEX, OCNF, QMAR, TBSI
Transport/Non Air 52-week low ... ODFL, PACR, SIR, USAK, WNC, YRCW

Keene Little : 10/17/2007 10:45:09 AM

It's still very early to make a bullish or bearish call since price remains trapped in a potentially bullish descending wedge. As I've mentioned several times, beware of the volatile chop and whipsaws.

Keene Little : 10/17/2007 10:42:29 AM

DOW has now overlapped that wave-1 high and makes it very likely the high for wave-C is already in. It's important here because the A-B-C bounce off yesterday morning's low could have completed another 2nd wave correction as I had labeled (dark red) on the SPX 60-min chart: Link

Keene Little : 10/17/2007 10:37:18 AM

The DOW has come the closest to overlapping the late-day bounce yesterday (wave-1 for its rally leg) at 13939.60.

Jane Fox : 10/17/2007 10:36:44 AM

I am expecting this market to make a very nice move upward (I was going to use the word explode but then thought that would put out on a limb way too far)

Keene Little : 10/17/2007 10:35:38 AM

Also on the SPX 5-min chart that I posted you can see the initial bounce off yesterday afternoon's low (at 1541.99, ES 1551.75). That would be wave-1 of wave-C. If this morning's pullback is wave-4 then it can't overlap the top of wave-1. So any drop from here below that level would be a signal the top is in. That would of course also be a drop below the 50% level and closing the gap would very likely be next.

Jeff Bailey : 10/17/2007 10:35:13 AM

Swing trade long exit alert! ... Permian Basin Trust (PBT) at the bid of $15.65.

Jeff Bailey : 10/17/2007 10:33:40 AM

US Oil Fund (USO) $66.53 -0.67% ...

Jeff Bailey : 10/17/2007 10:33:04 AM

StreetTracks Gold (GLD) $75.05 -0.09% ... should oil decline and dollar rise, gold may fall.

Jeff Bailey : 10/17/2007 10:32:06 AM

CNBC- EIA: Crude Oil Stockpile ... up 1.8 million barrels.

Keene Little : 10/17/2007 10:29:03 AM

The top of the gap for SPX (its opening price) is at 1544.44 and is often a support level. But ES opened near its high so snap a retracement from yesterday's close to today's open and look at where the 38% and 50% retracement levels are. You will often find support at one of these levels which for ES are at 1553.75 and 1552.25, resp. When a pullback gets through the 50% retracement it's then common for the entire gap to get retraced. Not a guarantee of course but can be a good guide when trading around gaps.

Jeff Bailey : 10/17/2007 10:28:28 AM

DJ Correction: ... Paulson Won't Oppose Terrorism Insurance Bill In Senate.

Jane Fox : 10/17/2007 10:28:12 AM

S&P has also retraced a shallow 23.80% and needs to fall further or move sideways before it makes new yearly highs. Link

Jane Fox : 10/17/2007 10:26:03 AM

DOW has retraced to the 23.80% fib level, which is a very shallow retracement. I think it needs to go further or consolidate here before it makes new yearly highs. Link

Jeff Bailey : 10/17/2007 10:24:59 AM

Reminder: ... Friday is October option expiration.

Keene Little : 10/17/2007 10:23:59 AM

After the bull flag consolidation yesterday and the sharp rally today, it's possible this morning's spike up finished wave-C of an A-B-C rally off yesterday morning's low: Link . Wave-C is 162% of wave-A at 1550.88 which was nearly tagged this morning. As I depict, we could see one more push back up to finish wave-C and it should be a good short play if it does.

Jeff Bailey : 10/17/2007 10:21:23 AM

Paulson: Won't Oppose House Version Of Terrorism Bill

Calls For Private Market For Terrorism Insurance.

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

TRIN is printing at 1.04, which is not too bearish, but its trajectory has been up and that is bearish.

Jane Fox : 10/17/2007 10:20:18 AM

Russell 2000 is showing us a very clear line in the sand but even if it does close below this support I would not be too worried. This market has a tendency to not trade according to how I think it should and is always kind of a renegade. Link

Linda Piazza : 10/17/2007 10:20:09 AM

I have to leave for an hour or maybe two. I have the same opinion I had earlier today. The SPX is testing levels that could be strong resistance, so I would be careful about drawing too many conclusions about the ultimate outcome yet. The whole purpose of a retest of a broken trendline is to see whether former support now holds as resistance or whether former resistance now holds as support.

Linda Piazza : 10/17/2007 10:17:14 AM

SPX 10-minute 9-ema has now risen to 1545.05. Bulls want it to hold as support on 10-minute closes; bears do not.

Jeff Bailey : 10/17/2007 10:14:56 AM

Swing trade call establish stop alert! ... for the GoldCorp. GG Jan $32.5 Call (GG-AZ) to $31.85 in the underlying.

GG $32.47 +0.15% ...

Linda Piazza : 10/17/2007 10:10:44 AM

So far, the SPX is maintaining the higher support level mentioned earlier rather than dipping to its 10-minute 9-ema, now at 1544.58. That suggests that there will be ongoing tests of resistance, now at 1549.78 on 10-minute closes.

Jeff Bailey : 10/17/2007 10:10:44 AM

Swing trade put lower target alert! ... for the one (1) iShare Russell 2000 IWM Oct. $78 Put (IOW-VZ) to $0.25.

Factoring in a commission, that's about as low as a trader could go for 1 contract.

Jane Fox : 10/17/2007 10:10:16 AM

Gold is continuing its move up and I am in on this move, finally!!! I missed that last rally. Link

Jane Fox : 10/17/2007 10:08:44 AM

This is really weird! VIX and AD volume are still both bullish yet price continues to move downward. If you are short be scared, be very scared.

Jeff Bailey : 10/17/2007 10:05:24 AM

StreetTracks Gold (GLD) $75.44 +0.42% ... after gapping higher to open $75.31, GLD edges back to test yesterday's high.

Jeff Bailey : 10/17/2007 10:01:54 AM

SPY ... after gapping higher to open $154.98, SPY edges back to test yesterday's high.

Jane Fox : 10/17/2007 9:56:14 AM

I watch 5 internals. The ones I put the most emphasis on are the VIX and AD volume and these two are bullish. The other 3 I watch are all bearish making life very difficult for sure.

Linda Piazza : 10/17/2007 9:55:03 AM

The VIX sure isn't supporting the idea of a rollover, is it? The USDJPY is dipping back to test support at 116.70, with the USDJPY now at 116.78.

Linda Piazza : 10/17/2007 9:53:06 AM

Bulls who entered sometime yesterday want to see the SPX maintain 10-minute closes above the 9-ema on that chart, now at 1543.94. In fact, they'd like to see 10-minute closes above a Keltner line now at 1546.13 as that would suggest a continued pounding at the overhead resistance. Old bears from Thursday or new ones who hoped for a rollover this morning want to see that 9-ema breached on 10-minute closes.

For the OEx, the 9-ema is now at 720.25.

Jane Fox : 10/17/2007 9:49:34 AM

I think this early morning bearishness will be short lived and is just giving you a dip to buy.

Linda Piazza : 10/17/2007 9:48:58 AM

My reasoning about the repos has been proven wrong or mostly wrong. The Fed has announced a repo in the amount of $6.250 billion, with a repo in the amount of $6.500 billion maturing today. That of course does leave a net drain of $0.250 billion, but that wasn't the type of net drain I was speculating the Fed might allow for the day. That bumps up the repos maturing tomorrow to $30.250 billion, too.

Jane Fox : 10/17/2007 9:48:14 AM

VIX is making new daily lows as the S&P futures make new daily lows so don't expect any follow through if short. It is usually the VIX that pulls ES in its direction and not the other way around.

Keene Little : 10/17/2007 9:48:10 AM

We're getting a pullback from resistance but nothing more than that yet. We could get another push back up to retest the high or make a minor new high (to create a 5-wave move up from yesterday afternoon's low) before we get a deeper pullback or something more.

Linda Piazza : 10/17/2007 9:45:56 AM

Here's the SPX on the 10-minute Keltner chart, showing the resistance that was tested this morning and how it acted in accordance with that resistance: Link Resistance has held so far.

Linda Piazza : 10/17/2007 9:43:32 AM

Here's where the SPX is on the daily chart with respect to the (dark green) rising trendline off the summer's low, the (dark blue) 10-sma and the (thin black) midline of it rising channel. Link Although the pop has been strong and I could certainly see more follow through up toward the 10-sma, this looks like a particularly vulnerable spot to me and I'd suggest caution about drawing too many conclusions just yet about what will happen by the end of the day.

Keene Little : 10/17/2007 9:41:42 AM

After breaking below its uptrend line from Sept 10th on Monday the RUT would retest that line with a bounce back up to 834 this morning.

Jane Fox : 10/17/2007 9:40:49 AM

Here is how the markets are trading in relation to their PDRs. Link

Jane Fox : 10/17/2007 9:39:01 AM

AD ratio is also making new daily lows although the AD volume is climbing.

Jane Fox : 10/17/2007 9:38:29 AM

Both the DAX and USDJPY are now making new daily lows (based on a 9:30ET open) and your first fly in the bullish ointment.

Linda Piazza : 10/17/2007 9:37:28 AM

So far, nothing is screaming reversal yet. All the ducks are in a row, but the SPX rises into what should be a strong resistance zone, comprised of the 10-sma and the rising trendline off the summer's low, violated this week.

Jane Fox : 10/17/2007 9:35:52 AM

VIX opens below its PDL and S&P futures open above its PDH. So all is well in bull country.

Linda Piazza : 10/17/2007 9:35:17 AM

USDJPY at 116.93, having tested 117.17 a few minutes ago.

Keene Little : 10/17/2007 9:35:02 AM

SPX and DOW both test their downtrend lines at the open. The bulls certainly don't want to see a gap n crap here.

Jane Fox : 10/17/2007 9:34:59 AM

AD line opened at +493 and is now +1404.

Linda Piazza : 10/17/2007 9:34:33 AM

The SPX has zoomed right up to the Keltner resistance that I mentioned earlier. That's right at 1549.80 right now, on 10-minute closes. Be wary of an early push during the first 15 minutes or so that's soon reversed, however. Right now, the resistance is just being tested.

Linda Piazza : 10/17/2007 9:33:24 AM

Let's test out some ideas when looking at what the Fed might do today with regard to repos. As I've freely confessed, I'm sometimes puzzling out what's going on with liquidity, currencies, etc., inviting you to puzzle through it with me or even enlighten me. In fact, I was originally hired to represent the self-taught trader who is doing just that, and I'm still doing it years later. My background is in physics, math and writing fiction, not economics. I've experimented with various types of trading, migrating gradually toward income-producing strategies such as credit spreads because I feel that they're more consistently profitable. At least they have been for me, as I didn't feel that even sound technical analysis could beat the odds stacked against the trader who is trading a wasting asset exclusively (as those who only go long puts and calls are doing).

So, here's what I've been watching. I've noticed a tendency lately for the Fed to allow some net drains, not replacing all the repos that are maturing and gradually reducing the amount sloshing through the system (repos that haven't matured). I've been wondering if this hasn't been a sign, if not exactly of confidence in the end of the credit crunch, of at least easier breathing, temporarily. Also, I wondered if it isn't one way of propping up the dollar, by reducing the amount sloshing through the system. That idea could be hogwash. I don't know. However, I have noticed some correlation lately, correlation that's maybe just coincidental. So, with equities performing well today, what would need to happen with the dollar, for example? There's been a positive correlation between the strength of the dollar (at least against the yen) and the performance of U.S. equities. With the dollar have dropped strongly since Monday, I would think the dollar needs some propping, so I would vote for a net drain today (so far at least), particularly since there's already $24.000 billion expiring tomorrow. Let's see if the Fed does allow a net drain.

Jane Fox : 10/17/2007 9:30:13 AM

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

Jane Fox : 10/17/2007 9:29:35 AM

Crude stabilized at around $87.50 overnight and the US$ and Gold prices reverted back to their indirect relationship, US$ down and Gold up.

Notice the DAX broke its PDH overnight as well. Link

Keene Little : 10/17/2007 9:29:05 AM

The gap up should also have the DOW testing its downtrend line from Monday which is at 14K right now.

Keene Little : 10/17/2007 9:23:49 AM

I just noticed on the SPX chart I posted last night (below) that I have 1546 labeled as the key level for the upside. It should be labled 1550 and is the previous high on Monday afternoon. With futures up so strong it looks like that level will be immediately tested. We'll see what happens after the open.

Jane Fox : 10/17/2007 9:19:26 AM

Higher highs and lows means the bulls have control. Notice the NDX futures have easily surpassed its previous day highs. Link

Jane Fox : 10/17/2007 9:18:52 AM

The CPI report "may further reduce chances of a Fed cut this month, especially as the Fed has yet to see more concrete evidence of a retreat in consumer spending," wrote Ashraf Laidi, chief currency analyst for CMC Markets.

Linda Piazza : 10/17/2007 9:19:45 AM

As I mentioned in the Wrap last night, after-hours action made it appear that we'd get a pop higher this morning. Strongest near-term resistance on the SPX's 10-minute charts is at 1548.22-1549.56 on 10-minute charts, but these lines are dynamic and they're going to get pushed up with the early price action if the cash markets do climb in accordance with current futures levels. So, I'd be looking for first potential resistance on 10-minute closes somewhere in the 1549-1551 zone. There's resistance in the 1542-1543 zone, but futures make it look likely that the SPX will just blow through that resistance. Analogous strongest OEX levels are currently at 721.86-722.63 but are likely to be pushed a point or so higher, too, by the early action.

If this happens, be aware of the broken rising trendline off the summer's low, now at about 1552-1554, just by eyeballing it. This is near the 10-sma, now at 1552.37. Whatever your stance, bullish or bearish, watch for rollover potential in that zone. If you entered a bullish play near yesterday's low, for example, you might want to think this morning before the open about how you'll treat that trendline test from the underside, if it occurs. Will you take partial profit, at least, and set the rest to breakeven, which I think I'd do at a minimum if I were in such a play? If you've been in a bearish play since last Thursday, have you reset your stop so that you will be taken out with a profit, at the least? I wouldn't let a swing trade that was profitable turn into a loser. You can re-enter the play later if you think there's going to be a rollover. If you're a wanta-be-bear, are you going to look for rollover potential if that trendline is retested? Now, while you're calm and can think about all the market forces, think about what you'll do.

Another possibility presents. If the SPX and OEX blow through those stronger resistance levels that I mentioned above and sustain values above them, they're setting much higher upside targets. We'll look at where those are if that should happen. The daily charts and several setups make it look more likely that the 10-sma's, at least, will provide resistance, but never underestimate the strength of bullish fervor, even when charts suggest it should be otherwise.

Jane Fox : 10/17/2007 9:17:54 AM

WASHINGTON (MarketWatch) -- U.S. consumer prices increased 0.3% in September on higher food and energy prices, but core inflation remained more moderate, rising 0.2% for the fourth month in a row, the Labor Department reported Wednesday.

The 0.3% increase in the consumer price index was the biggest since May. The figures came in exactly as expected by economists surveyed by MarketWatch.

The CPI figure will be used by the Social Security Administration to set next year's cost-of-living adjustment for benefits received by about 50 million Americans.

COLA is expected to rise 2.8% in January to match the gain in the CPI for workers over the past four quarters. The COLA rate will be officially announced later Wednesday.

Jane Fox : 10/17/2007 9:09:00 AM

BOSTON (MarketWatch) -- The Mortgage Bankers Association predicts the housing recession will last until the end of the third quarter next year. And if confidence isn't restored in the credit markets, the wait could extend until 2009, the group's chief economist said.

In the meantime, the slowdown in housing has become a primary cause in the slowing of the national economy, said Doug Duncan, chief economist of the group.

"Tough times," he said, after sharing the group's loan production estimates during a briefing with reporters on Tuesday. Tough times indeed.

Jane Fox : 10/17/2007 9:06:28 AM

WASHINGTON (MarketWatch) -- U.S. home builders continued to cut back in September, starting construction on the fewest number of new homes in more than 14 years, the Commerce Department reported Wednesday.

Housing starts fell 10.2% to a seasonally adjusted annual rate of 1.19 million, the lowest since 1.32 million in March 1993. The decline was larger than expected.

Meanwhile, building permits dropped 7.3% in September to a seasonally adjusted annual rate of 1.23 million, the lowest since July 1993 and less than the 1.28 million pace expected by economists surveyed by MarketWatch.

Housing starts are down 30.8% in the past year, while permits have fallen 25.9%.

The decline in building was more noteworthy in apartment buildings, starts of which fell 34.3% to a 228,000 annual rate, while single-family permits fell 1.7% to 963,000, the lowest since March 1993. Single-family starts are down 30.8% in the past year.

Linda Piazza : 10/17/2007 7:20:03 AM

What happened overnight with the USDJPY? After a brief continuation of the climb off the low that had begun earlier, the USDJPY rolled over again while the Nikkei traded. A new recent low of 116.17 was hit at about 1:00 EST, a far drop off Monday's 117.91 high. It's been bouncing through the wee hours of the morning and is currently at 116.78, but that movement is a bit more suspect than the movement earlier in the night when the Nikkei was trading (or when the BOJ members were awake to make decisions--smile).

Conclusion? As long as the USDJPY is below 117.00-117.15, it may remain vulnerable to a downturn again toward the 38.2% retracement of the summer's steep decline, with that at about 116.33. This wee-hours-of-the-morning bounce is a little suspect. Watch because although this barometer for equities has not proven as reliable an indicator as it once watch, you'd still like the movement in this currency pair to be going in the direction of your trade.

Linda Piazza : 10/17/2007 6:46:16 AM

A repo in the amount of $6.500 billion matures today.

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