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Jeff Bailey : 10/24/2007 12:08:39 AM

Nikkie-225 ($NIKK) Link ... currently up 63 points, or +0.39% at 16,514.

High/Low has been 16,578 / 16,491.

Keene Little : 10/23/2007 10:57:36 PM

Wednesday's pivot tables: Link and Link

Monday night I had pointed out that the DOW, SPX and RUT charts looked very similar in their wave counts. The bearish wave count required the bounce off Monday's low stay below the low on Oct 17th otherwise it would negate that count and suggest either something more bullish is going on or else we'll be in a larger corrective (a-b-c) kind of wave count (which makes it much more difficult figuring out where we go next).

Tuesday's rally had the RUT rallying above that Oct 17 low near 812 and therefore I've relabeled the chart (for SPX and DOW also even though their equivalent Oct 17 lows have not been violated) as an A-B-C (dark red) move down. For the bearish wave count that creates a larger degree wave-(a) down and the current bounce will make wave-(b) and then we'll get an even stronger decline to follow. The bullish wave count is looking for a new high such as the NDX is currently giving us. Link

So far the bounce off Monday's low looks very choppy and corrective and that has me leaning towards the bearish outcome rather than the bullish. Keep an eye on the uptrend line from Monday as a break below it should signify the top of the bounce is in. The same setups for the DOW and SPX:
DOW: Link
SPX: Link

While I show some upside potential for all of them one cautionary note is from what I see on SPX (and the fact that futures are down after AMZN's earnings, which will likely depress techs and retail and therefore everyone). Within the bounce pattern off Monday's low there is an internal Fib projection at 1519.73 which was tagged just before the close. It's possible that the bounce finished at Tuesday's high. Just keep an eye on its uptrend line, currently near 1511 if drawn from Monday afternoon and 1505 if drawn from Monday morning.

NDX has been much more bullish than the others and pressed to new highs, unmatched by anyone else (that's bearish non-confirmation so far). It too may have peaked, especially if it drops below 2170 but that's a long ways back down. Ideally we'll get a pullback that leads to another high around 2220 (long term projection is up to 2211) which would set up a beauty of a short play. Link

OI Technical Staff : 10/23/2007 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.

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Keene Little : 10/23/2007 4:58:19 PM

Pretty good analysis/observation by John:

I see that AMZN got hammered after the bell - has dropped 10 points. That's one I have never understood. It doesn't make very much money, pays no dividends, and does not have huge growth potential because of strong competitors in every phase of its business. IMHO it should be trading between $35-$40 per share, but nobody is listening to me.

How about this scenario: A lot of traders (big and small) loaded up on short (naked) Puts last week figuring they would expire worthless. When they got surprised by the move down (which threatened their position) they shorted the stock (which accelerated the selling). Monday morning they ended up with short positions. They were content to stay short as long as the market continued south. However, when prices began to rise they started dumping those short positions (which, of course, accelerated the buying).

Now, I think the situation in the big FOUR techs is something else. That is nothing more than giddy retail buyers piling into these sexy issues hoping the momentum will carry them higher.

Keene Little : 10/23/2007 4:53:57 PM

Let's see, if NDX can pull back tomorrow and then rally on up to the 2220 area, that should get QQQQ to about 55.50. I could be tempted to buy a few puts on the Q's if it gets up there within the next couple of days. OK, OK, I could be tempted to buy a Lot of puts up there but I'll stay disciplined.

Jeff Bailey : 10/23/2007 4:49:55 PM

Stopping out of a short at the session highs in the QQQQ will do it to you! That's about as bullish as you get isn't it Keene?

Jeff Bailey : 10/23/2007 4:45:17 PM

SPY ... WEEKLY Pivot was formidable there at the close.

QQQQ and RUT.X close above theirs.

Will browse AMZN's numbers, but retailers might take some heat tomorrow morning.

Keene Little : 10/23/2007 4:42:00 PM

Actually I've been bullish for a whole day now! (wink)

Jeff Bailey : 10/23/2007 4:37:58 PM

FCOL (for crying out loud) ... not in here though!

The Bear's Den

Keene Little : 10/23/2007 4:33:06 PM

LOL, I think you're right Jeff. It's got to be getting pretty quiet out there in bear land.

Jeff Bailey : 10/23/2007 4:30:32 PM

Don't know if shorts got anything left to put in the back of your truck Keene!

Jeff Bailey : 10/23/2007 4:28:56 PM

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

Keene Little : 10/23/2007 4:20:24 PM

AMZN tanking after their earnings (down more than 8$ from their close near 101). What a shock. Maybe this will give us the needed pullback in NDX before setting up the final rally leg (for a back-the-truck-up short play): Link

Keene Little : 10/23/2007 4:07:00 PM

CME has also confirmed that it is in the bullish wave count now by rallying to a new high. Upside Fib projections for the last leg up are just above 650 (wave-5 = 62% of wave-1 and 138% projection off the previous decline) and then near 675 (wave-5 = wave-1 and 162% projection off the previous decline). Link

CME looks similar to NDX right now in that it would look best with another small pullback and then a final high so the 650 target looks like a good one right now. Notice the likely negative divergence that will be left behind if it doesn't get much higher. Maybe a little throw-over above the top trend line and then a drop back below it--that would be the sell signal.

Jeff Bailey : 10/23/2007 4:04:15 PM

iShares Japan (EWJ) $14.02 +0.35% ... did tick $14.05 at the 04:00 hour.

Jane Fox : 10/23/2007 4:03:01 PM

Economic reports out tomorrow include.

10:00a.m. Sep Existing Home Sales. Expected: -3.6%. Previous: -4.3%.

Jeff Bailey : 10/23/2007 4:00:51 PM

SPY Alert! $151.90 +0.90% ... gets the trade at WEEKLY Pivot.

Keene Little : 10/23/2007 3:55:39 PM

NDX is approaching its broken uptrend line from August 16th (it broke below it last Friday), just under 2206. That would be a good upside target for it to start a pullback into tomorrow before setting up its final (?) rally leg.

Keene Little : 10/23/2007 3:53:27 PM

For now I continue to like SPX 1523-1523 for an upside target for the bounce. Maybe early tomorrow morning will set up a short trade.

Keene Little : 10/23/2007 3:52:14 PM

Looking at the bounce pattern for SPX, this has really been an ugly rally. It looks very corrective with overlapping highs and lows and lots of chop. It has all the appearances of a correction to the decline and looks like a typical b-wave (like 4th waves).

One of the best guides for these are simple trend lines and parallel channels (or rising wedges for the bounces). When price breaks the uptrend line we'll know the bounce is probably finished. Until that happens we have no idea how high this bounce could go and it's why I'm saying stick with the long side for now but don't overstay your welcome (like overnight).

Tab Gilles : 10/23/2007 3:47:47 PM

Try again on that Barron's link Link

Keene Little : 10/23/2007 3:44:47 PM

The downtrend line for SPX from its Oct 11 high is currently near 1521.

Tab Gilles : 10/23/2007 3:40:49 PM

Sears Holdings (SHLD)

$130 has been support, ran up to 100-ma, note $165/200-ma and GAP? Link

Weekly chart Bullish Divergence Link

Interesting report from Barron's Link

January 165 calls (KDUAM) look attractive here...

Jane Fox : 10/23/2007 3:40:27 PM

These charts of the overnight session show you just how unbalanced the markets have been of late. This entire rally has been on the back of the tech stocks. Link

Jeff Bailey : 10/23/2007 3:38:30 PM

Swing trade call establish stop alert! ... for the one (1) S&P Dep. Receipt SPY Nov $153 Call (SYH-KW) at $149.90 in the underlying.

SPY $151.34 +0.53% ...

SYH-KW $2.21 x $2.23.

Keene Little : 10/23/2007 3:22:48 PM

Using some Fib projections and speculation for the next pullback in NDX, here's the pattern I'd like to see play out from here in order to complete a clean 5-wave move up from Monday's low. A small choppy pullback soon should lead to another rally leg to finish it and for now I'm projecting up to about 2234 for a top: Link

This will of course be modified as the wave pattern develops further. Bottom line is that it's too early to be thinking short. The risk is that failure could occur at any time. As I've shown on the weekly chart, price is nearing the top of its parallel up-channel from 2002 and a projection for two equal legs up from October 2002 at 2211. We're almost there, as the daily chart shows: Link and the weekly: Link

Keene Little : 10/23/2007 3:03:11 PM

Earlier I showed a weekly chart of GOOG and how it has made it up to the top of a longer term parallel up-channel from 2004. Today's rally has also taken it to the top of its steep up-channel from September. Having gone parabolic on us I can only suggest bulls be a little careful on this one. When the air comes out of this one it's not going to squeak out--it's going to pop. It's still showing negative divergence at the new high, confirming this is very likely its 5th and final wave: Link

Jeff Bailey : 10/23/2007 2:46:52 PM

Alcatel-Lucent (ALU) $9.42 +3.28% ... also in pact with RIMM $126.34 +11.43% ...

Jane Fox : 10/23/2007 2:46:43 PM

I should have bought more Q calls yesterday. :) Link

Jane Fox : 10/23/2007 2:44:43 PM

NEW YORK (MarketWatch) -- Gold futures closed with gains on Tuesday, as renewed weakness in the dollar boosted demand for the precious metal.

Gold for December delivery gained $3.10 to close at $763.10 an ounce on the New York Mercantile Exchange. On Monday, gold closed down $8.40 at $760 an ounce.

"Gold prices recovered more than half of yesterday's net losses as the U.S. dollar moved lower once again," said Jon Nadler, a senior analyst at Kitco Bullion Dealers, in a research note.

"A mild recovery and stabilization of the global equity markets helped matters for bullion," Nadler said.

On the currency markets, the dollar index, which tracks the performance of the greenback against a basket of other currencies, fell 0.6% to 77.59. Weakness in the U.S. dollar increases the attractiveness of gold as a hedge against inflation.

Keene Little : 10/23/2007 2:42:12 PM

For you EW'ers, notice that I changed the wave count on the SPX chart. Even though the low on Oct 17th (near 1526) hasn't been violated, I'm thinking the RUT is already telling us the impulsive wave count to the downside is wrong. The best way to label the decline from the October high is an A-B-C. That sets up all kinds of possibilities from here and we're back to playing this one leg at a time until the larger pattern clears up.

No home runs here--continue to take your profits earlier rather than later. I'm thinking I may want to do the same on my gold and oil shorts, especially since gold is trading very similarly to equities, but it's easier to give advice than take it (wink). I believe the bounce in SPX and the DOW will roll back over and not make new highs but it's a question how big the bounce could get.

Personally, since I shorted the highs in gold and oil, I'm hanging on for the longer term play but that's because I don't have the desire to day trade and am instead trying to catch longer term swings in the market. Only you can decide how you like to trade and how much you're willing to let the market bounce against your positions (just never let it turn into a loss--that's rule #1; Rule #2 is "see rule #1").

Jeff Bailey : 10/23/2007 2:34:29 PM

Reuters- RIMM Surges On China Smartphone Distribution Pact

Keene Little : 10/23/2007 2:33:24 PM

The SPX 60-min chart shows that it has joined the RUT in having RSI break (and retest) its downtrend line from Oct 11th: Link . That suggests price will do the same. First resistance, as I mentioned, should be 1523-1524. Whether it sets up a short play there we'll have to wait and see. For now stay bullish.

Jeff Bailey : 10/23/2007 2:32:45 PM

Research in Motion (RIMM) $123.03 +8.51% ... surging.

Jeff Bailey : 10/23/2007 2:28:55 PM

QQQQ's MONTHLY R2 at $54.17. From there, WEEKLY R2 $54.41.

Jeff Bailey : 10/23/2007 2:27:34 PM

QQQQ alert! $53.96 +1.67% ... new 52-weeker.

Jeff Bailey : 10/23/2007 2:25:43 PM

AAPL +6.61%, MSFT +1.24%, QCOM +0.14%, GOOG +3.00%, CSCO -0.73% ...

Jeff Bailey : 10/23/2007 2:24:11 PM

QQQQ $53.89 +1.54% ... the beating goes on.

Jeff Bailey : 10/23/2007 2:23:22 PM

Sector Losers ... Semiconductors -2.69%, Homebuilders -0.45% ...

Jeff Bailey : 10/23/2007 2:22:40 PM

Sector Winners ... Airlines +2.96%, Oil Service +2.66%, Gold Bugs +2.33%, HMO's +1.86% ...

Keene Little : 10/23/2007 2:20:16 PM

That kind of move, as small a bounce as it would be for SPX, would certainly enable NDX to make a new high.

Jane Fox : 10/23/2007 2:19:42 PM

VIX is now tagging its daily lows so the S&P futures will at least tag its daily highs.

Keene Little : 10/23/2007 2:19:35 PM

A 38% retracement of the SPX decline from Oct 11th is at 1523.28. I've got some internal Fib projections in the bounce off Monday's low pointing to just above 1524. Until I see something else that makes it look more bearish sooner than that I think we could be headed to 1523-1524 (cash).

Keene Little : 10/23/2007 2:07:21 PM

It's a very shallow downtrend line with only two points but watch NDX 2190 for possible resistance.

Jeff Bailey : 10/23/2007 2:06:35 PM

QQQQ alert! $53.76 +1.30% ... new intra-day high.

Keene Little : 10/23/2007 2:00:38 PM

BTW, in case I'm not watching CFC at the time (although I'll set my alarm for 8.00 on the stock), if you're interested in buying CFC once the 5-wave move down from its February high is complete it should get a good bounce, at least back up to the apex of the triangle so perhaps 19 or so. It would be worth at least a double if you pick it up at the low.

Keene Little : 10/23/2007 1:56:34 PM

Here's an interesting comparison of two methods to project a price move. As I just posted on CFC chart, I've got a downside price objective at 7.77 which is based on equality between the 1st and 5th waves. Another way to get a projection is to take the widest part of the sideways triangle and then use that measurement to project from the break (shown with the vertical blue lines on the chart): Link

Isn't it just a little bit interesting that they both project to the same level, practically to the penny. I love symmetry.

Keene Little : 10/23/2007 1:43:52 PM

Jeff's comment on CFC prompted me to take another look at its daily chart where I showed the sideways triangle that recently broke to the downside. Only 7.25 to go to get to its downside target at 7.77: Link

Jeff Bailey : 10/23/2007 1:37:36 PM

Countrywide (CFC) $15.07 -3.89% ... reversing morning gains.

Jeff Bailey : 10/23/2007 1:36:54 PM

I figure ... if the banking/saving&loan gets a big bounce, then that's going to fuel SPX/SPY.

If not, then WM likely leads further weakness to the dowside.

WM coiling like a rattle snake that's been stepped on in its 30-min interval chart.

Jeff Bailey : 10/23/2007 1:29:49 PM

Swing trade put alert! ... while it looks "oversold." ... Let's take one (1) of the Wash Mutual WM Dec $30 Puts (WM-XF) at the offer of $2.95.

No stop for now, target $22.50.

WM $28.53 -2.46% ...

Jeff Bailey : 10/23/2007 1:27:58 PM

Blah! ... what's $0.10/contract?

Jane Fox : 10/23/2007 1:27:08 PM

I agree with Keene in that Gold is due for a retracement and I will be increasing my long position once the daily jtHMA turns back red and the 60/120 turn green again (buying the dip).

Jane Fox : 10/23/2007 1:25:06 PM

I took a long term Gold bullish position when the daily jtHMA charts turned back green on October 10th. Link

Jane Fox : 10/23/2007 1:22:54 PM

The NDX has already given us that buy signal. Link

Jane Fox : 10/23/2007 1:22:14 PM

And the SPX Link

Jane Fox : 10/23/2007 1:21:46 PM

Ditto the DOW. Link

Jane Fox : 10/23/2007 1:21:14 PM

Russell 2000 jtHMA charts are just about to give a buy signal. We just need the 120 minute to turn back green. Link

Keene Little : 10/23/2007 1:19:31 PM

The 60-min chart of oil (December contract) shows what I hope is the new down-channel as price works its way lower: Link . The longer term uptrend line from January 2007, currently near 81, is my target before exiting my short. But if at any time the price pattern to the downside starts to look like a corrective pullback I'll then pull my stop down closer.

Keene Little : 10/23/2007 1:09:31 PM

Yep, still short both gold and oil since I'm thinking I caught the top of their rallies and now trying to let my winners run. The risk, as always, is giving a bunch of profits back but I haven't seen anything yet that tells me we should be looking for new highs in oil or gold.

Jeff Bailey : 10/23/2007 1:02:35 PM

Keene ... I thought you had blown out of both short at the recent lows. Didn't know you were short.

Jeff Bailey : 10/23/2007 12:56:18 PM

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

CLOSED out the MUR-MP at the bid of $7.60. MUR was trading $74.65 (Closing Benchmark "CB") at the time.

Keene Little : 10/23/2007 12:50:38 PM

Jeff, the last line of your 12:40 post--yes I am. But stops have been lowered on both shorts for gold and oil and I'm just trying to stay above the noise. I'll lock in a profit if stopped out of my oil short at 87 (haven't lowered it again yet) and I'm lowering my stop on my gold short to 770 to lock in 3.50 if stopped out. <--- alert on the gold trade (lowering my stop).

Jeff Bailey : 10/23/2007 12:49:34 PM

Altria (MO) $72.00 +0.73% ... X gets the square.

Keene Little : 10/23/2007 12:46:09 PM

The semis remain weak today, currently consolidating near the day's low. The daily chart shows a potential H&S pattern since May and depending on which neckline is used I get a downside price objective out of the pattern close to 30 and then 28: Link

The first neckline was broken last week and has the downside projection just above 30. A break of the lower neckline near 34.50 would project down closer to 28. Interestingly, the P&F chart (3-box reversal) doesn't turn bearish until it prints 27 and until that happens it still has a bullish price objective to 62: Link

Jeff Bailey : 10/23/2007 12:42:43 PM

iShares Japan (EWJ) $13.96 -0.07% ... session high has been $14.04. Any guesses where its WEEKLY Pivot is at?

Jeff Bailey : 10/23/2007 12:40:46 PM

US Dollar Index (dxy) 77.58 (30-minute delayed) ... here's a 60-minute interval chart with MONTHLY (dark purple) and this WEEK's pivot retracement Link

Looked like the greenback might have started to put together a bounce yesterday, but this morning's action back below WEEKLY Pivot and that darned 09/28/07 low had dxy looking further vulnerable to 77.06.

As short as oil and gold is, I think bears in both sectors are going to be jittery.

Keene Little : 10/23/2007 12:29:40 PM

Here's as good an update as any on the market right now (thanks Scott):

Helium is up
While feathers are down.
Paper is stationary.
Fluorescent tubing is dimmed on light trading as Knives are up sharply.
Cows steered into a bull market.
Pencils are off a few points.
Elevators are rising while escalators continue their slow decline.
Weights up in heavy trading.
Light Switches are off.
Mining equipment hit rock bottom.
Diapers remain unchanged.
The market for raisins has dried up.
Sun peaked at midday.
Balloon prices were inflated and Scott Tissue touched a new bottom.
Finally, Batteries exploded in an attempt to recharge the markets.
MORE AT 6:30

Keene Little : 10/23/2007 12:23:45 PM

Even bonds are a choppy mess since yesterday.

Keene Little : 10/23/2007 12:22:45 PM

Today's high level consolidation pattern for NDX (and GOOG and AAPL) continues to suggest higher highs to come. While I think there will be bearish non-confirmation from the other indices, it doesn't mean they can't all rally together. Until I see something more bearish setting up for NDX I won't get bearish the broader market. For the short term (today) it could go either way and I just don't have enough confidence to pick a side. There are better times to trade and this is not one of them, imo.

Jeff Bailey : 10/23/2007 12:22:11 PM

Trying to come up with one bearish reason to hold a MUR put ... tough... very tough.

Jeff Bailey : 10/23/2007 12:21:20 PM

US Dollar Index (dxy) 77.61 -0.58% ... oil has tended to want to bid on dollar weakness.

Jeff Bailey : 10/23/2007 12:20:35 PM

Last thing our account MM profiles need is a MUR gap higher tomorrow with PTR still $252.09 +1.09%.

Jeff Bailey : 10/23/2007 12:16:46 PM

MUR probably more like a "mini XOM" (producer/explorer; refiner/marketer)

XOM $90.33 -0.63% ...

Jeff Bailey : 10/23/2007 12:14:01 PM

VLO $67.44 -1.40% ...

FTO $39.94 -0.96% ...

Jeff Bailey : 10/23/2007 12:13:17 PM

VIX.X 21.02 -2.86% ...

Jeff Bailey : 10/23/2007 12:12:56 PM

Swing trade put close out alert! ... for the one (1) Murphy Oil MUR Jan $80 Put (MUR-MP) at the bid of $7.60.

MUR $74.65 -1.59% ...

Jeff Bailey : 10/23/2007 12:11:20 PM

Murphy Oil (MUR) alert! $74.65 -1.59% ... shares were upgraded to "neutral" from "underweight" this morning at JP Morgan. I say we cut and run on the MUR-MP's ahead of tomorrow's earnings and EIA data.

BP $74.99 +1.50% earnings were "blah" in my opinion, yet stock bids from yesterday's low of $73.

December Crude (cl07z) "refuses" at this point to trade below its MONTHLY R1.

Keene Little : 10/23/2007 11:44:28 AM

Looking at the decline from this morning's high (except for NDX which continues to march to the sound of a different drummer), a small bounce here followed by a new low would give us an impulsive decline. That new low would then set up a larger bounce (for a scalp long if interested) and then a shorting opportunity once the bounce finishes. SPX 1500 continues to look like it could be a good support level if it drops lower to set up the scalp long play.

Jane Fox : 10/23/2007 11:32:19 AM

AD line has now fallen to +72, another indication the bears have taken control of the reins.

Keene Little : 10/23/2007 11:30:38 AM

The uptrend line from yesterday for the DOW is near 13529 so we'll see if the bear flag pattern holds or breaks down from there. The same uptrend line for SPX is a little lower near 1500 (which would be closer to round-number support for the DOW at 13500).

Jane Fox : 10/23/2007 11:24:56 AM

All markets are now back into their previous day ranges except the NDX futures. Link

Jeff Bailey : 10/23/2007 11:24:41 AM

Wal-Mart (WMT) $43.65 -3.60% ... notably weak.

Keene Little : 10/23/2007 11:21:57 AM

NDX continues to look potentially bullish from here. It would have to drop below 2160 (printing 2175 at this time) to turn more bearish.

Jane Fox : 10/23/2007 11:17:57 AM

Internals are all bearish now so it is a sell the rallies kind of day. Link

Keene Little : 10/23/2007 11:08:34 AM

I was playing around with a log chart on GOOG because of its large run higher in the past two years and saw that today's price tagged the top of its parallel up-channel when viewed with the log scale: Link

But what's even more interesting is that on the linear price scale GOOG has also tagged the top of a parallel channel attached to the January 2006 high (I left the top of the other channel, light blue, on the chart): Link

I'm thinking we could be seeing the high for GOOG right here.

Jeff Bailey : 10/23/2007 11:07:38 AM

Sector Status Changes on Monday at this Link (comments/analysis/strategy to follow)

Jane Fox : 10/23/2007 11:07:08 AM

Filled at 13635 and 13630 if you left it.

Jane Fox : 10/23/2007 11:06:29 AM

Raising my target to 13635 now.

Jane Fox : 10/23/2007 11:04:32 AM

YM has now made a low of 13637 so within 7 ticks of target. You may want to lower your stop but not to breakeven that is too close on the YM.

Jeff Bailey : 10/23/2007 10:56:59 AM

MUR $75.20 -0.87% ... earnings after the bell Wednesday.

VLO $67.73 -0.96%

FTO $40.00 -0.80% ...

Jane Fox : 10/23/2007 10:55:49 AM

Short from 13659 stop is 13685 and target is 13630.

Keene Little : 10/23/2007 10:55:09 AM

NDX is chopping higher and SPX is chopping lower. The only common denominator between the two is chopping.

Jeff Bailey : 10/23/2007 10:51:43 AM

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

EWJ-WO are $0.95 x $1.05. Will likely EXIT/CLOSE out these today.

Jane Fox : 10/23/2007 10:49:50 AM

I have a short on the DOW setting up at 13659, if it gets there that is.

Keene Little : 10/23/2007 10:44:02 AM

The little sideways consolidation in the DOW and SPX looks bullish for another push higher. Unless it breaks down instead (wink). Or it could go sideways.

Keene Little : 10/23/2007 10:40:15 AM

As Jeff mentioned, it is a big day for the Trannies. The index has broken out of what appears to be a bull flag pattern from its October high: Link

On its daily chart last Friday I pointed out that if the Trannies were going to bounce that was the time to do it--off its uptrend line from March 2003. A push back up to the 100 and 200-dmas, coming together near 5000, or up towards the top of its consolidation pattern near 5050 at the moment, could be next for this index: Link

Jane Fox : 10/23/2007 10:33:44 AM

AD volume is making new daily highs and that would be enough for me to not take a short. However, the AD ratio is making new daily lows and the VIX is hovering mid range so I would not take a long either since these are not giving us a clear picture. USDJPY is making new daily lows and DAX new daily highs so these two are in conflict as well.

Jeff Bailey : 10/23/2007 10:32:22 AM

Big day for the Tranpsorts ... breadth positive at 20:0 Link

Keene Little : 10/23/2007 10:31:24 AM

The buying spikes that keep hitting NQ this morning, followed by big spikes to the downside looks like a distribution pattern to me. Trading that can be extremely frustrating as it stops out both sides with the whippy price action. It could continue to push higher but a choppy price pattern to the upside is usually an ending pattern. Figuring out where it will end is the hard part. I think standing aside for now is a better way to play it right here. I don't see a high-confidence setup at the moment.

Keene Little : 10/23/2007 10:25:05 AM

The RUT is now back below its downtrend line. Not quite sure what to make of its price pattern at the moment, considering the fact that it broke above 812.40, the low on Oct 17th. We've definitely got a fractured market at this point between the signals I'm getting from techs, small caps, blue chips and semis (showing greater weakness in that order).

Jeff Bailey : 10/23/2007 10:22:49 AM

Texas Inst. (TXN) $31.38 -8.43% ...

Jeff Bailey : 10/23/2007 10:21:33 AM

COACH SHARES SLIDE ON STORE TRAFFIC CONCERNS

DJ- Shares drop 11% as leather goods and accessories company posts net income of $154.8 million, or 41c a share. Sales increase 28% to $677 million, but the company raises some caution about North American store traffic ahead of the holidays.

COH $36.73 -11.42% ...

Keene Little : 10/23/2007 10:20:37 AM

Semiconductors continue to head south, down -2.5% this morning.

Jane Fox : 10/23/2007 10:16:37 AM

Here is how the markets are trading in relation to their previous day ranges. Link

Jeff Bailey : 10/23/2007 10:13:18 AM

REDBOOK US RETAIL SALES FALL 0.2%

DJ- National chain store sales fall 0.2% in first two weeks of October versus the previous month, according to Redbook Research. International Council of Shopping Centers-UBS Retail Chain Store Sales Index falls by 1.5% in week ended Oct. 20.

Jeff Bailey : 10/23/2007 10:12:25 AM

COUNTRYWIDE TO REFINANCE UP TO $16B IN LOANS

DJ- Mortgage lender will begin calling borrowers whose interest rate is set to adjust by end 2008 to offer refinancing or modifications on $16 billion in loans as firm faces federal pressure to help prevent foreclosures.

CFC $16.01 +2.10% ...

Jeff Bailey : 10/23/2007 10:11:26 AM

JOHNSON CONTROLS 4Q NET JUMPS 29%

DJ- Maker of automotive systems posts earnings of $466 million, or 77c a share, helped by a rise in building efficiency sales. Earnings from continuing operations are 78c a share, matching expectations.

JCI $40.18 +0.27% ...

Jeff Bailey : 10/23/2007 10:10:14 AM

BP 3Q NET EARNINGS DOWN 29%

DJ- BP says its 3Q net earnings fell 29.3% to $4.41 billion, or 23.1 cents a share, compared with $6.23 billion, or 31.4 cents, as lower margins and production outages offset high crude prices.

BP $75.61 +2.34% ...

Keene Little : 10/23/2007 10:09:23 AM

SPX 5-min chart is showing some negative divergences so far at this push higher. A rollover from here could signal a larger pullback at least. The DOW has two equal legs up from yesterday at 13661 so be careful if you're chasing this higher.

Jeff Bailey : 10/23/2007 10:08:59 AM

UAL, JETBLUE BEAT 3Q EXPECTATIONS

DJ- Parent of United Airlines reports net income of $334 million, or $2.21 a share. Excluding items, it earns $1.96 a share, well above expectations of $1.88. JetBlue posts net profit of 12c a share, 5c more than expected, sending its shares up 5%.

UAUA $48.46 +0.68% ...

JBLU $9.61 +5.83% ...

Jeff Bailey : 10/23/2007 10:06:51 AM

UPS 3Q NET UP 4% ON GLOBAL GROWTH

DJ- Package-delivery firm posts earnings of $1.02 a share. On an adjusted basis, EPS is $1.05. Total revenue rises 4.7% to $12.21 billion. Wall Street expected EPS of $1.02 on revenue of $12.2 billion.

UPS $76.10 +1.37% ...

Jeff Bailey : 10/23/2007 10:05:40 AM

Dow Transports (TRAN) 4,932 +1.79% ...

Jeff Bailey : 10/23/2007 10:04:58 AM

BURLINGTON NORTHERN 3Q NET UP 8.4%

DJ- Shares jump 5% after railroad operator earns $530 million, or $1.48 a share, despite continued economic softness in its consumer and industrial products business groups. Revenue rises 3.3% to $4.07 billion.

BNI $87.05 +4.91% ...

Jeff Bailey : 10/23/2007 10:03:30 AM

DUPONT 3Q NET UP 8.5%, RAISES VIEW

DJ- Chemicals maker reports net income of $526 million, or 56c a share. Excluding items, earnings are 59c a share; Wall Street expected 52c. Revenue rises 5.9% to $7.04 billion. Company raises its 2007 earnings forecast.

DD $47.07 +1.07% ...

Jeff Bailey : 10/23/2007 10:02:19 AM

AT&T NET UP 41% ON WIRELESS STRENGTH

DJ- AT&T earns $3.06 billion, or 50c a share, in 3Q, amid recent acquisitions, as the company's wireless business continues to drive performance. Adjusted earnings are 71c a share, matching Wall Street expectations.

T $41.57 +0.97% ...

Keene Little : 10/23/2007 9:57:46 AM

While we've got some things that are looking a little bullish (other than some worrisome signs as I just mentioned), the pattern for the DOW and SPX are far from bullish yet. Therefore another minor new high this morning (to complete a 5-wave move up from yesterday afternoon) with negative divergences on the 5-min charts would be an opportunity to test the short side. Only after the next larger pullback will the bounce pattern clear up some (hopefully). The risk for both sides right now is whippy price action.

Keene Little : 10/23/2007 9:47:23 AM

Worrisome right now is that MER is going in the opposite direction (it's in the red) and the semiconductors are not participating with the techs.

Keene Little : 10/23/2007 9:46:05 AM

NDX looks the most bullish (and is up the most this morning) as it charges back up towards last week's high. That one continues to look like it will give us a new high. The RUT has negated the bearish wave count I have on its chart and has just now broken above its downtrend line from Oct 11th. As I had shown on its 60-min chart last night (below), the RSI break of its downtrend line was in fact a good heads up that this was coming. The form of the next pullback will be key for the bulls now.

Jane Fox : 10/23/2007 9:45:15 AM

Link

Jane Fox : 10/23/2007 9:45:01 AM

I took a long QQQQ position yesterday. obviously a little early but the jtHMA charts are now confirming that long.

Jane Fox : 10/23/2007 9:37:03 AM

VIX opens below its previous day lows and falling. Bulls have control today.

Jane Fox : 10/23/2007 9:35:11 AM

AD line is a very bullish +1273

Jane Fox : 10/23/2007 9:28:28 AM

Markets are now breaking their overnight highs.

Jane Fox : 10/23/2007 9:24:04 AM

Here are your charts of Gold and Crude and the stark difference between these two is the MACD. Crude's MACD is following price whereas Gold's MACD is building a bearish divergence. It will be interesting to follow these two and see how the MACD affects trading going forward. Link

Jane Fox : 10/23/2007 9:17:44 AM

Yesterday I suggested a long in SPX, DIA or the Qs. Here are the jtHMA chart of the SPX and if you were a little more conservative trader you would be waiting for the 60/120 minute charts to turn back green before you took that long. I am a conservative trader but did not wait this time. We'll see if I get my head handed to me or not. Link

Keene Little : 10/23/2007 9:12:55 AM

Pre-market action in equity futures got a bit whippy since the 4:00 AM low but now at their highs. We've got a very bullish start to the day ahead of us. Two equal legs up for ES from yesterday morning's low (RTH trading) is at 1523.50 which is two ticks above this morning's pre-market high so far. Gap n crap? That's always a tough call and we'll just have to see how it plays out this morning.

Jane Fox : 10/23/2007 9:01:14 AM

US$ down and Gold is up - sort of. I am surprised Gold is not up more because Oil is up as well.

USDJPY is supporting the bullish you see in the American equity futures. Link

Jane Fox : 10/23/2007 8:51:06 AM

All markets breached their respective previous day ranges overnight. This is not overly bullish but the consolidation you see at overnight highs suggest to me it will break higher. Link

Jane Fox : 10/23/2007 8:47:14 AM

Reports out today include:

10:00a.m. Oct Richmond Fed Manufacturing Index. Previous: 14.

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