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Keene Little : 10/26/2007 12:39:38 AM

Equity futures took a big jump in after-hours after the MSFT earnings. Whether that will carry over into the morning is the big question (already dropped back to the flat line this evening). The choppy price action this week is leaving a big question mark on the charts and I'm beginning to think, especially with FOMC now only 4 trading days away, that we're going to consolidate sideways into next Wednesday. This SPX 60-min chart shows what it might look like (in pink): Link

But instead of a sidways consolidation we could be in the middle of a rising wedge (shown in pink on this DOW 60-min chart) to correct the October decline: Link

As shown with the dark red depiction, the Thursday afternoon bounce could have been a correction to the morning decline which will now be followed by a sharp decline below the recent lows. SPX 1490 is an important level in this regard--as long as it holds then prepare for choppy price action but if it breaks then expect a hard selloff.

At the end of the day I pointed out on the daily chart of GOOG that we could have a topping signal (and by extension perhaps one for NDX as well). After gapping up Friday morning GOOG then sold off for most of the day and left a bearish engulfing candlestick near resistance (top of its channel, including its longer term channel) and shows negative divergence at the new high. Link

Keene Little : 10/25/2007 11:58:20 PM

Friday's pivot tables: Link and Link

e-mini futures contracts you'll see traded on the Monitor and the current front month:
DOW 30 (YM), December
S&P 500 (ES), December
Nasdaq 100 (NQ), December
Russell 2000 (ER--may be different on your charts), December
10-year Note (ZN), December
30-year Bond (ZB), December
Gold (YG), December
Silver (YI), December
Oil (QM), October

Approximate futures premium over cash (December futures):

YM -- +31
ES -- +5.50
NQ -- +15.00
ER -- +3.00

OI Technical Staff : 10/25/2007 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The Market Monitor has been archived.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.

Keene Little : 10/25/2007 4:58:47 PM

Yesterday I mentioned that GOOG could give us a quick pop up to about 680 if 677 didn't hold. I thought it might happen late yesterday but it happened at this morning's open instead (this morning's pre-market high was 681.30). It then proceeded to sell off for most of the day. It just got a quick blast higher again after the cash market closed but it has dropped back down to its afternoon lows just under 672.

The daily candle is a bearish engulfing candlestick near resistance (top of its channel, including its longer term channel) and showing negative divergence at the new high. The top might have finally been made today and if not then it should be very close. Of course very close for GOOG could mean $700 so trade this one carefully! Link

Jeff Bailey : 10/25/2007 4:48:24 PM

BIDU's earnings Link probably not out until later this evening. I've got a "ROCKTOBER" party I need to get to. I'll check in later this evening.

Go Rockies !

Jeff Bailey : 10/25/2007 4:45:15 PM

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

Jeff Bailey : 10/25/2007 4:31:08 PM

US Oil Fund (USO) $70.12 +3.14% Link ... Good Gravy! ... went up a lot faster than it went "down" from 10/19-10/23.

Keene Little : 10/25/2007 4:27:03 PM

Instead of a sidways consolidation we could be in the middle of a rising wedge to correct the October decline: Link . Between the DOW and SPX pattern that I'm showing it should be clear why I'm saying we're going to have to wait for more price action before we get some more clarity as to what could be next.

Jeff Bailey : 10/25/2007 4:21:54 PM

McAfee (MFE) $37.79 -3.91% ... Ticking $38.80.

Keene Little : 10/25/2007 4:15:39 PM

We're getting a big jump in after-hours futures. Whether that will carry over into the morning is the big question. The choppy price action this week is leaving a big question mark on the charts and I'm beginning to think, especially with FOMC now only 4 trading days away, that we're going to consolidate sideways into next Wednesday. This SPX 60-min chart shows what it might look like (in pink): Link

Jeff Bailey : 10/25/2007 4:13:26 PM

Microsoft (MSFT) $31.99 +2.36% ... surging on headline numbers. $33.58 ...

Jeff Bailey : 10/25/2007 4:10:34 PM

McAfee (MFE) $37.79 -3.91% ... Earnings Press Release Link

Linda Piazza : 10/25/2007 4:04:43 PM

Futures traders should perhaps be aware that Japan reports September's CPI and Industrial Production tonight. CPI is important.

Jane Fox : 10/25/2007 3:59:48 PM

Economic reports tomorrow include:

10:00a.m. End-Oct Reuters/U Of Mich Sentiment Index. Expected: 82. Previous: 83.4.

Jeff Bailey : 10/25/2007 3:59:46 PM

Key Earnings After The Close

Baidu.com (BIDU) ... Consensus is for EPS of $0.63 on Revenue of $65.3M. Next quarter consensus is for EPS of $0.70 on Rev of $75.72M

McAfee (MFE) ... Consensus is for EPS of $0.39 on Revenue of $320.23M. Next quarter consensus is for EPS of $0.43 on Rev of $339.60M.

Linda Piazza : 10/25/2007 3:53:31 PM

FWIW, I'm looking at the SPX's 30-minute Keltner chart. Resistance near 1519-1522 echoes the historical resistance established by the high of the day, while the 1527.28 resistance is near the 10-sma. Support is near 1511 and then near 1501, but below 1511, support looks weaker than resistance on a technical level. None of that has meant anything today, as I doubted it would, and the daily chart confirms that many indices are chopping out some kind of consolidation zones.

Keene Little : 10/25/2007 3:48:51 PM

SPX 1520 should be the top of this move if the small fractal pattern is playing out so watch for a short play there. I suspect we'll get another leg down to give us an a-b-c drop down from this morning's high, maybe down to about 1498 and then chop back up as we form a large consolidation pattern into next week.

Keene Little : 10/25/2007 3:43:49 PM

This afternoon's bounce looks like a smaller version (a fractal) of the bounce off yesterday afternoon's low and the small consolidation here could be followed by a quick spike up (like this morning's move) followed by another decline if the fractal plays out the same way. We're getting the move higher now so that could set up a selloff tomorrow morning.

Jeff Bailey : 10/25/2007 3:38:44 PM

PAULSON ASSAILS RANGEL'S TAX BILL

DJ- Treasury Secretary Paulson criticizes proposed $1 trillion tax overhaul unveiled by Rep. Charles Rangel, the House's top tax writer. Paulson says legislation would boost taxes 'dramatically,' and in ways that harm U.S. competitiveness.

Jane Fox : 10/25/2007 3:37:45 PM

If the VIX is not going to ring the bell at market bottoms then the MACD does a pretty good job, like it did today. Link

Jeff Bailey : 10/25/2007 3:37:22 PM

NYMEX CRUDE CLOSES AT RECORD $90.50 ON SUPPLY CONCERNS

DJ- Crude oil futures close at a record $90.50 a barrel before settlement, gaining $3.40 after a forecast for lower-than-expected oil shipments from OPEC. New sanctions on Iran, coupled with persistent tensions between Turkey and Kurdish rebels, also fuel buying.

Linda Piazza : 10/25/2007 3:19:35 PM

Exactly as I envisioned today, and as Keene noted as his expectation in last night's Wrap, too: a who-knows-what-direction kind of day. Upside targets are set, downside ones are set, and few of them are met.

Jeff Bailey : 10/25/2007 3:17:29 PM

KANSAS CITY FED MANUFACTURING INDEX RISES

DJ- The bank's production index edges up to 7 in October from 4 in September. The prices paid index lifts to 35 from 28 on a monthly basis and climbs to 71 from 61 on an annual basis. The prices received indexes are also higher.

Jeff Bailey : 10/25/2007 3:14:08 PM

MBIA MARKS DOWN DERIVATIVES; STOCK PLUNGES (update)

DJ- Bond insurer posts a 3Q loss of $36.6 million, or 29c a share, compared with net of $217.9 million, or $1.59, a year earlier as wider spreads lower the value of the company's structured-credit derivatives portfolio.

MBI $47.91 -13.13% ...

Keene Little : 10/25/2007 3:03:09 PM

No let up in the buying and that last flare up was another bout of short covering. To say it's difficult to short this market would be an understatement. I'm getting the feeling that we're going to just chop sideways in a big consolidation pattern until FOMC.

Jeff Bailey : 10/25/2007 3:02:21 PM

DJ- MBIA Marks Down Derivatives; Stock Plunges

Jeff Bailey : 10/25/2007 2:55:35 PM

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

Keene Little : 10/25/2007 2:54:04 PM

The bounce is developing a bit of a rising wedge appearance on the 1-min charts so any break back below the uptrend lines from today's low should usher in strong selling.

Keene Little : 10/25/2007 2:51:08 PM

Could still get another poke higher but the bearish divergences are suggesting topping action here.

Keene Little : 10/25/2007 2:46:35 PM

SPX is still battling its downtrend line from October 11th--it has now bounced back up to and stalled. I'd say it's a good short against this most recent bounce high.

Keene Little : 10/25/2007 2:40:14 PM

Nope, bulls aren't done yet. This could make it up to a 62% retracement at this rate.

Keene Little : 10/25/2007 2:37:14 PM

This bounce wouldn't be the 2:00 head fake move would it? Not sure at this point if that's all there will be to the bounce. Obviously if it breaks to a new daily low you should pile on top of the bears as the move down should be swift in that case.

Linda Piazza : 10/25/2007 2:36:24 PM

The SPX closed the last 15-minute period just a hair above the 9-ema, but below the converging 45-ema. It's turning down below both now. So far, I'd have to say it still maintains that downside target, now moving lower to 1491.84, but I still maintain my skepticism about any targets, upside or downside, today. I'm studying daily charts now and that just confirms my opinion of this zone as a chop zone that's likely to be filled with unpredictable moves.

Jeff Bailey : 10/25/2007 2:31:11 PM

VXN.X 27.01 +8.91%

Jeff Bailey : 10/25/2007 2:29:50 PM

Swing trade put alert! .... for one (1) SPECULATIVE ... Baidu.com BIDU Nov $260 Puts (BDU-WV) at the offer of $3.40, LIMIT $3.50.

BIDU $344.32 +2.47% ... No stop, and will look for a "gap down" to close out at $7.90/contract.

Keene Little : 10/25/2007 2:28:50 PM

Hmm, turning a little more bullish without a pullback after what I thought was a small 5-wave bounce. Question here is whether this is just being jammed up to stop out the shorts (and drop right back down) or if something more bullish is starting.

Keene Little : 10/25/2007 2:25:27 PM

There's a little 5-wave bounce so we should now get a pullback and then another leg up. After the 2nd leg up is when the next short play should set up. The bounce is so far approaching a 38% retracement of today's decline.

Linda Piazza : 10/25/2007 2:23:56 PM

OEX 15-minute 9-ema at 703.45, with further resistance at 704.35 and then 706.02. A potential downside target is still maintained, now at 696.96, but take that one with a grain of salt, too.

Linda Piazza : 10/25/2007 2:23:13 PM

SPX 15-minute 9-ema now at 1507.19, with further resistance at 1508.90 and then 1512.64. So far, the potential downside target is maintain and has in fact moved lower to 1492.32. As I said earlier, however, take it with a grain of salt.

Keene Little : 10/25/2007 2:14:56 PM

So far today we're getting lower highs on the bounces and have a clear downtrend. As soon as a previous high is exceeded it will be a confirmation of the completion of the 1st leg down. Then it will be a matter of waiting to see how the bounce sets up for the next shorting opportunity.

Keene Little : 10/25/2007 2:13:16 PM

Some short term bullish divergences are starting to show up so a bigger bounc may be right around the corner. If it can press lower then the uptrend line for the DOW at 13510 could be support.

Jeff Bailey : 10/25/2007 2:12:12 PM

Anyone feeling speculative? Willing to risk some of this month's MM gains?

Linda Piazza : 10/25/2007 2:10:07 PM

The USDJPY has now broken below the rising trendline off yesterday's mid-morning dip. The USD has dropped to 113.79 currently, a little above the just-reached low of the day at 113.75, with yesterday's 11:15-ish low at the identical 113.79. This is do-or-die level for this equity pair as a drop much below this sets a potential downside target of 113.34.

Linda Piazza : 10/25/2007 1:55:22 PM

If you don't trade credit spreads, my previous answers to subscribers might have proven confusing. When I talked about giving up part of my profit to close the trades, some might have assumed I took a loss. Fortunately for me, that's not true. When credit spreads are first opened, you receive a credit that's placed in your brokerage account. It sits there and, if all goes as you hope it will, you get to keep all of that credit. When I elected to give up part of my profit, as I mentioned, it was just part of the credit (or profit) that I'd originally collected. I kept the rest. As of about an hour ago, I have closed out all of my November credit spreads, and I've kept the majority of the original credit or profit that I collected. Because I didn't put on the bull put portion of the condors this month, because I was afraid of weakness that might appear this month, I didn't make as much this month as I could have, and I also elected to put on fewer contracts this month than usual. I had 63 contracts, all total, on the SPX, RUT and MID. It's too hard to get far enough away on bear call spreads on the OEX, so I seldom do those. Even those fewer than normal credit spreads exposed me to a lot of risk if an adverse strong price movement occurred, though. Since those were all 10-point spreads (I no longer do any 15-point SPX spreads), that meant I had a possibility of losing $63,000 if we woke up one day and . . . what? We used to say if Osama bin Laden had been found, but I don't think that would zoom the markets that high any longer. Anyway, if we woke up one morning and the president had elected to award each of us a number of solid gold bars with the express intention that we were to spend their value to buy equities, I could have lost $63,000. Now, I've locked in my profit, albeit a smaller profit than I might have made, and I have no risk right now. Zippo, nada, until I institute some December trades. It's worth it to me to give up that last $0.10-0.15/contract of profit. It might not be to the rest of you: that's giving up a potential $630.00-945.00. Again, there's no right or wrong answer to this and I'm not setting myself up as an expert, just inviting you to come along with me as I explore various choices and ways of thinking about managing risk.

Keene Little : 10/25/2007 1:54:14 PM

MER is making new lows here.

Jeff Bailey : 10/25/2007 1:53:55 PM

EUR/USD 1.432 at the bid.

USD/JPY 113.83 at the bid

Jeff Bailey : 10/25/2007 1:52:59 PM

Me thinks whatever US-based assets Iran didn't get out of the U.S. by now, they aren't getting out now.

Jeff Bailey : 10/25/2007 1:49:51 PM

US Slaps Broad New Sanctions On Iran ... AP Story Link

Jeff Bailey : 10/25/2007 1:46:01 PM

TRIN 0.97

Jeff Bailey : 10/25/2007 1:44:33 PM

YM 13,620 ... 5-minute chart interval has 21-pd SMA trending lower at 13,661. 200-pd SMA relativly flat at 13,654.

MACD trying to curl up at -21.49 (see yesterday's MM)

Keene Little : 10/25/2007 1:36:22 PM

NDX looks like a clean 5-wave move down to today's low. If that one is correct (not good correlation with the others yet) then we're set up for a larger upside correction of today's decline. That would then set up another shorting opportunity but be aware that we could get a larger bounce from here now.

Keene Little : 10/25/2007 1:30:22 PM

A nice downside target for the DOW is 13510 which is its uptrend line from Monday. If achieved I'd take some profits off the table and see what kind of bounce we get, or breakdown (and hopefully a retest to add to your short position). Keep chasing this down with a trailing stop just above today's downtrend line. Let your winner run but protect against a big bounce.

Jeff Bailey : 10/25/2007 1:25:11 PM

AIG $60.08 -5.82% ...

Jeff Bailey : 10/25/2007 1:24:41 PM

TRIN 1.08

Jeff Bailey : 10/25/2007 1:24:10 PM

YM short target alert! 13,605.

Linda Piazza : 10/25/2007 1:22:59 PM

As long as the SPX produces 15-minute closes beneath the 9-ema, now at 1511.09, it maintains a tentative downside target of 1493.37. Take it with a grain of salt.

As long as the OEX produces 15-minute closes beneath the 9-ema, now at 705.14, it maintains a tentative downside target of 697.37. Ditto about the grain of salt.

Linda Piazza : 10/25/2007 1:16:14 PM

If the SPX closes this 15-minute period anywhere near its current 1507.96 level, then it will have set a tentative downside target of 1493.35. As I said earlier, though, be wary of these targets today. Oops. The time period closed; target was set.

Jane Fox : 10/25/2007 1:15:06 PM

Internals are not giving me any hints the bears are losing control.

Jane Fox : 10/25/2007 1:14:09 PM

Previous day lows are still intact - so far. Link

Jeff Bailey : 10/25/2007 1:13:21 PM

YM short alert! ... here at 13,652. Stop goes 13,661. Target 13,605.

Keene Little : 10/25/2007 1:10:54 PM

There's the break back below the SPX downtrend line from Oct 11th which leaves today's break to the upside looking like a bull trap. For now though, continue to chase this lower and use the bigger bounces to lower your stop.

Linda Piazza : 10/25/2007 1:10:43 PM

TRAN's headed down toward yesterday's 4791 low and today's 4789.51 Keltner target. At 4804.71 as I type, it's closely approaching those targets, so be careful of bounce potential in the TRAN, and therefore in the SPX, OEX and Dow. For now, it's continued pushing lower should be driving those other indices lower, too. Doesn't always work that way, though.

Jane Fox : 10/25/2007 1:02:02 PM

This chart of the US$ is telling me it is ready for a correction and that has some huge ramifications on my long Gold position. You know sometimes I wish I just didn't know about all these market interactions, it would make my investing decisions so much easier, not better but a lot easier. Link

Jeff Bailey : 10/25/2007 12:59:02 PM

Anyone pricing out the WM Nov $25 puts for potential premium sale against the currently long $30 puts?

Jeff Bailey : 10/25/2007 12:57:32 PM

USO $70.00 probably equivalent to CL07Z $90.00.

Jeff Bailey : 10/25/2007 12:56:41 PM

Best plan was to exit at $68.40 if traded, then buy a dip back near $67.50 for the eventual push to $70.00.

Jeff Bailey : 10/25/2007 12:54:13 PM

USO $69.25 +1.88% ... VERY suprised I/you got "juked out" at $68.40.

Usually only happens when another trader can SHORT it down to trigger the stop, which then provides some liqudity to take the security higher.

Keene Little : 10/25/2007 12:51:55 PM

After breaking its downtrend line from October 11th, SPX has now pulled back to it, currently near 1511 (right here). If it keeps dropping correctively just above this broken downtrend line then it's going to look bullish. If it drops sharply back below it then the bears will be winning. Jury's still out.

Linda Piazza : 10/25/2007 12:51:44 PM

I also took another look at the USDJPY. It is back down at the rising trendline off yesterday's low. At 113.99 as I type, it's threatening to break through that trendline. Watch for bounce potential, as this line has bounced the currency pair four previous times when tested over the last two trading days, with support now down to 113.85. A break much below that would be negative for equities, though, I should think.

Linda Piazza : 10/25/2007 12:49:04 PM

Denise just reminded me to take a look at the TRAN. It just hit a new low of the day a few minutes ago, with that low at 4815.58 and the TRAN now at 4825.50. The TRAN has a downside target of 4793.14, which would constitute a retest of yesterday afternoon's low, if it happened.

So, if the TRAN is leading anywhere, as it sometimes does lead some indices, it's leading down so far. Watch for bounce potential as yesterday's low is approached, however.

Linda Piazza : 10/25/2007 12:42:00 PM

SPX 15-minute 9-ema and 120-ema's are converging at about 1513.45-1513.50.

Jeff Bailey : 10/25/2007 12:39:51 PM

SYMC's bar chart Link

MFE's bar chart Link

Keene Little : 10/25/2007 12:34:58 PM

YM stopped just shy of this morning's downtrend line (ES's line is a bit higher). With YM turning back down that's where I'd now lower a stop on it (just above the bounce for ES too in order to lock in as much profit as possible while forcing price to prove to you that it's getting more bullish).

Linda Piazza : 10/25/2007 12:34:42 PM

I think that's all the questions that I've received over the last 24 hours about my comments about managing risk in credit spreads. Again, I'm not setting myself up as an expert but rather relating my thoughts and experiences as I sought to fulfill my trading goal for this year--determining the best exit strategy for my personal needs. As I told one of the subscribers yesterday, when my brother asked me to trade his account, I referred him to Mike instead, so nothing I've said should be construed as criticism of Mike's abilities or policies. In fact, since Mike encourages his subscribers to think for themselves, perhaps it should be construed as validation of his urging to do just that.

What works for me won't work for everyone. However, as I listened to webinar after webinar, I was increasingly struck by the impression that I don't have to let that credit spread sit there, with the risk remaining, straight through until opex. Maybe you, too, will decide that you can give up a proportion--admittedly a hefty proportion sometimes--of the credit you collected to remove the risk and go on to another trade. Maybe you'll decide you'd rather let the spread sit there and dissolve to nothing and not give up any of your profits to close it. There's no right or wrong: there's always a tradeoff for each decision. I like my tradeoff--giving up some of my profit for lowered risk--but maybe you prefer a different one.

Jeff Bailey : 10/25/2007 12:34:32 PM

Somebody just chunked 5 million shares.

Jeff Bailey : 10/25/2007 12:34:09 PM

Comcast (CMCSA) $21.40 -10.31% ... getting whacked. #2 most active.

Jeff Bailey : 10/25/2007 12:30:11 PM

Bugger can't get much above 1.00 today.

Jeff Bailey : 10/25/2007 12:29:28 PM

Gregory! ... You watching TRIN?

Jeff Bailey : 10/25/2007 12:27:08 PM

Post profile low on the YM came at 13,659.

9, 9, 9, 9, 9. Crazy ...

Linda Piazza : 10/25/2007 12:26:44 PM

I'm about through now answering the questions I've received from subscribers, I think. Another subscriber wanted to know about my legging out of a spread. Couldn't the market move against me before I could sell to close the bought option, after first (always first) buying to close the sold one?

Sure it could, but I actually learned this technique from Mike as well as from others. I don't usually leg out of a spread this way, but I've found it works best on this condition: when there's no bid on your long option. When I couldn't get a trade to go when I was attempting to close out a spread and I talked to my broker, the floor manager for that broker said that there was no bid on the long option and I should just close out the sold option. I bought to close it at the same debit limit I'd had on the whole thing, and it went immediately, after sitting there for the better part of a day. Mike had mentioned a while ago how he sometimes will then turn around and try to sell his "worthless" bought or long option for a nickel, and it often goes. So, that's why I legged out of a position yesterday. I paid $0.15 debit to BTC my15 NOV 1660's because there was no bid on the 1670's. Then I turned around and sold the 1670's for a nickle, cutting down my debit to exit (the part of my profit I gave up) to $0.10. I could have lived with the $0.15, so that's why I did it, but I was certainly glad to have it reduced to $0.10.

So, again, I don't typically leg out. But if I do, it's only because there's no bid on the long option and I'm satisfied with what little debit I can manage to BTC the sold one and then will give it a try to collect a nickel on my so-called worthless option.

Jeff Bailey : 10/25/2007 12:25:33 PM

YM short stopped alert! 13,689 ...

Jeff Bailey : 10/25/2007 12:25:01 PM

That's another 52-weeker too!

Jeff Bailey : 10/25/2007 12:23:30 PM

Wash Mutual (WM) $27.34 -5.78% ... bidder at $28.00 exhausted.

Jane Fox : 10/25/2007 12:22:59 PM

The bears have control.

Jane Fox : 10/25/2007 12:22:45 PM

AD line and volume have dipped below 0 now. Very choppy out there but if you look at the S&P futures and VIX charts you get a much clearer picture. Link

Keene Little : 10/25/2007 12:20:25 PM

We now have what could be considered a 3-wave pullback from this morning's high. If it's to turn into a larger impulsive decline we should now get a smaller sideways/up consolidation followed by another low. But if it bounces stronger from here and takes out the downtrend line from this morning's high then it will likely mean we could see another press higher to new highs.

Linda Piazza : 10/25/2007 12:17:24 PM

Some subscribers wanted to know how far ahead of time I entered credit spreads in order to be able to exit them for $0.10-0.15 (and, even last month when I was particularly concerned about the markets, for $0.20) this far ahead of option expiration. I typically enter a credit spread from 5-7 weeks before option expiration. Occasionally, I'll do one eight weeks ahead, and occasionally, I can find enough premium to do one only four weeks ahead, but it's typically 7 weeks. I took a look at the MID 980/990 that I exited today. I entered that trade October 8, so only about three weeks ago, not quite seven weeks before November's option expiration.

Some appeared doubtful that you could exit three weeks before opex if you'd just entered a trade at the normal CPTI time period, but that's why I was encouraging traders to look at their spreads. You'd be surprised how often you can do this. I've closed out every credit spread I had well before opex for the last two opex cycles, and those included some bull put spreads as well as bear call ones. I used to watch only how far away something was in the weeks leading up to opex, and I didn't really watch closely whether I could exit until opex week, if I exited at all. This, though, was my very reason for writing. Now that I've been thinking about risk differently, I've been watching more closely. Each day, I look to see if those spreads have narrowed. If you're interested in reducing risk and haven't been watching for a narrowing of your spreads, you might have missed opportunities, if you're inclined to take them. Again, this differs from Mike's approach and his is valid. Mine is just a different way of approaching things, a way that works for me and apparently for some others.

Jeff Bailey : 10/25/2007 12:14:07 PM

I like to snug a stop as a "key level" about to trade. Just in case computers jam the security. In the case of YM, as it approaches DAILY Pivot.

Jeff Bailey : 10/25/2007 12:12:56 PM

YM short lower stop alert! ... to 13,689.

YM 13,661.

Jeff Bailey : 10/25/2007 12:10:39 PM

YM day trader's 5-minute interval chart Link

Linda Piazza : 10/25/2007 12:07:26 PM

Right after my 11:50:43 post, prices broke to the downside. The SPX cascaded fell through its 15-minute 9-ema, all the way to the lower support at the 45-ema, now at 1509.75. (Did they finally figure out all those revisions for the summer months for the new home sales?) The SPX is attempting to bounce, but not to successfully as yet. If the SPX were to close a 15-minute period beneath 1509.75, it sets a potential downside target of 1493.67. Hasn't happened yet, and I'd be careful of trusting any targets, upside or downside.

Linda Piazza : 10/25/2007 12:02:57 PM

Over the last 24 hours, I also received questions about my willingness to give up $0.10-0.15 of my received profit, as I was doing yesterday and as I did again today (8 MID NOV 980/990's and 10 SPX 1640/1650's).

Again, there's the whole idea of the tradeoff. Is the SPX ever going to hit 1640 before Nov opex or the MID 980? Maybe not. Probably not. Maybe I gave up that profit for nothing.

However, there are still more than three weeks to go until November's opex. For me, it's worth it to give up $0.10-0.15 to remove $18,000 more risk from my portfolio, especially with an FOMC meeting next week. Volatility can expand around an FOMC meeting, widening the spreads, so that even if the MID or SPX went down heavily, the spreads might not be at this level again for another week or two or even into opex, depending on volatility and price movement.

For you, maybe it's not worth it. For most of my experience trading condors, I did not close out positions under these circumstances. They're safe: I let them run. However, I got bit once or twice over the last several years during opex week, when it was too late to adjust, from supposedly safe positions. Then, when talking to or listening to webinars by former market makers, who are all about managing risk, I kept hearing, "Why would you leave that risk there?"

Again, my approach differs from Mike's, so if you're a CPTI devotee, I'm not urging you to take my word for it and not follow Mike. He's more experienced than I am. Again, each approach has its pluses and minuses and only you can decide what works best for you. I'm also beginning to be all about managing risk. I want to produce reliable income while managing the risk, too.

Keene Little : 10/25/2007 12:02:33 PM

Uh oh, Jeff and Keene short at the same time. Shorts pull your stops down tighter (wink).

Jeff Bailey : 10/25/2007 11:58:10 AM

YM short triggered alert! at YM 13,697.

Jeff Bailey : 10/25/2007 11:54:17 AM

YM short setup alert! ... with YM 13,702, look to SHORT the YM on a trade at 13,697. Stop will be tight at 13,729. Target 13,610.

Keene Little : 10/25/2007 11:53:36 AM

The short play is still alive but I'm not excited about the move down from this morning's high. I'm continuing to lower my stop to just above each bounce high (once the previous low is taken out) in effort to control risk and take as much out of this short as possible.

The pattern in the pullback so far looks corrective and gives me the feeling it's going to rally back up. I don't trust that interpretation enough to recommend a long play (or exit a short) but it does make me nervous enough to pull the stop down tighter along the way here.

Linda Piazza : 10/25/2007 11:50:43 AM

Prices on the SPX are flattening out along the 15-minute 9-ema, with other channel lines cycling up and converging above and below. This is rather typical for the lunchtime lull period, but it renders my Keltner charts less useful than is typical. Nearby support (down to 1509.89) and resistance (up to 1522.68) look about equally weighted and RSI is 55.31, near the neutral 50 level. No prediction until there's a breakout or a breakdown.

Linda Piazza : 10/25/2007 11:46:12 AM

Yesterday, I wrote a post relating my use of the day's dip to exit some credit spreads. I encouraged subscribers to think about their own risk management strategies, admitting that mine are different from those of many. You certainly did think about them! I've received a number of emails asking me to clarify certain points, so I'll be making posts through the day answering the many questions that have been received.

Before I do that, however, I want to clarify that I'm neither competing with Mike Parnos nor setting my abilities or schemes up as superior to his. I've attended Mike's seminars, consider him a mentor and trust his judgments. I think Mike himself would tell you that he expects CPTI traders to do some thinking for themselves, though, and I'm an independent sort, so I certainly do that.

One of the emails over the last 24 hours asked about my statement about my "by-now-well-advertised feeling" about adjusting bear call versus bull put spreads, so I'll start with that. I've posted about this several times over the last week or two and didn't want to repeat myself too much. It's my personal experience that it's easier to adjust (usually by rolling up) a bear call spread that's going wrong because markets are climbing than it is to adjust a bull put one if markets should cascade down. There's a lot more fear in the markets at those times, I trade the SPX a lot, and the SPX desk can get swamped when markets are cascading lower.

So, it's just a personal experience that leads to that feeling. Perhaps your experiences are different. Perhaps you use different exit parameters than I do, and when your exit parameters are hit, you find it just as difficult to adjust the bear call spreads.

I always set a trading goal. (In fact, I've already begun working on next year's.) This year I set a trading goal of experimenting with various exit parameters and determining what worked best for me. After a lot of trial and error, a lot of hours spent listening to webinars by various experts and talking to other traders, and one disastrous month when I tried a horrible hedging strategy that resulted in a huge loss, I've hit upon a method that works well for me. It's based on deltas. I've written about it in some of my Trader's Corner articles, but it basically has me adjusting bear call spreads when the delta of the sold strike hits 0.22-0.25 and bull put ones when the delta of the sold strike hits 0.20-0.22. I didn't invent this strategy. A former floor trader who is all about managing risk presented it on a CBOE webinar. You'll find it there with a title something like "Adjusting Condors."

If you've looked at deltas on your sold calls, you'll recognize immediately that has me adjusting trades well before the sold strike is hit or even closely approached. Depending on when that happens in the opex cycle, it might be 40-50 points away on the SPX, for example. I've talked to Mike about this, and he disagrees with the strategy for this reason. You might be adjusting a spread when the sold option will never be hit or even too closely approached.

However, you're also adjusting a position when things are still relatively calm, when you can make a reasoned decision and execute your plan calmly. You have an absolute map of when to do what, and no agonizing over should I or shouldn't I? You just do it. Emotion removed. As I've noted before, the birth of a fragile granddaughter with many ongoing problems led me to revamp my portfolio so that I wouldn't be daytrading any longer, having an open trade when I suddenly got called away due to an emergency, but I found myself last year sometimes letting prices test a sold strike and see if they retreated, sometimes using another exit strategy, and results were mixed. So I've been on a quest for an exit plan that both protects my profits and further allows me to remove emotion from these decisions, making them calmly and in a reasoned manner. That big loss? It led me to the exit strategy that I ultimately decided was best for me, so although my trading account won't look too good this year, I'm actually glad for the prompting to keep looking that the loss delivered.

In any decision you make with options, there are going to be tradeoffs. This is the tradeoff that works for me. I'm not evangelizing here or competing with Mike--something that both he and I would find laughable--but only encouraging traders always to think about what's right for them. I have written before that I suffered a big loss in the middle of the year due to a disastrous attempt to hedge the credit spreads in an attempt to be more agile, so I'm not one who hides my faults or losses. I confess too much rather than too little.

I say this because the tenor of some of the emails is rather doubtful. That's okay. I'm telling the truth about my quest, my losses during the quest, and my ultimate decision, but I'm not the one you're supposed to trust. You're supposed to trust yourself, so find what works for you. I'm not going to take your word for it when I decide on an exit strategy and I don't want you automatically taking mine either.

Keene Little : 10/25/2007 11:37:17 AM

I need to step away for about 15 minutes. Keep your stop on a short just above the bounce high at 11:00 AM.

Jane Fox : 10/25/2007 11:16:56 AM

Here are the charts of the AD volume and Ad volume ratio. I have put arrows on the charts to show you when the Ad volume was making new daily highs but the ratio was not. This should be telling you the AD volume (absolute) will start to weaken and you should start to pull in your bullish horns. I'm not saying grow bearish claws but just smaller horns. Link

Linda Piazza : 10/25/2007 11:13:23 AM

The OEX's 15-minute 9-ema is at 707.43, with next support at 706.41 on 15-minute closes. Next resistance is at 710.55 and then at 711.22.

Linda Piazza : 10/25/2007 11:12:37 AM

SPX's 15-minute 9-ema is now at 1515.95 with further potential support on 15-minute closes at 1513.46. This has been support on 15-minute closes since the SPX broke above it between 2:00-2:15 yesterday. Next resistance above the SPX currently is at 1522.27 and then at 1524.09 on 15-minute closes. As long as the SPX produces 15-minute closes above that 9-ema, it's likely to go on challenging that resistance.

Jeff Bailey : 10/25/2007 11:10:47 AM

Swing trade put alert! ... for one (1) of the McAfee MFE Jan. $40 Puts (MFE-MH) at the offer of $3.90. No stop for now, target $34.00 in the underlying.

MFE $38.00 -3.38% ...

Jeff Bailey : 10/25/2007 11:08:45 AM

Pretty decent volume spike (206,800) in MFE here. Juuuust under its WEEKLY Pivot of $38.01.

Keene Little : 10/25/2007 11:07:33 AM

With the roll back over you can now lower your stop to just above this morning's lower high. I'm trying to keep risk tight since another push higher above this last bounce would likely mean new daily highs.

Jeff Bailey : 10/25/2007 11:01:37 AM

Symantec (SYMC) $18.29 -12.98% ... notably weak.

Keene Little : 10/25/2007 10:56:54 AM

Until this morning's low breaks you need to stay aware of the possibility for the market to chop a little higher in a rising wedge as shown on this SPX 10-min chart. So if you're short against this morning's high and get stopped out, keep an eye on the top of this pattern for another entry, perhaps near 1528 (cash). Link

Keene Little : 10/25/2007 10:45:17 AM

Any bounce back up towards this morning's high is now a short against the high.

Linda Piazza : 10/25/2007 10:33:59 AM

Keltner resistance held on the just-ended 15-minute period although it was pierced during the period. That resistance is now at 1521.49 on 15-minute closes, with further resistance at 1524.43. There was bearish price/RSI divergence at this test, which doesn't prove anything except that you should begin watching for the possibility that price action will confirm what the RSI suggests may happen. The 15-minute 9-ema is now at 1514.79, joined by other potential support at 1513.31, so nothing hash appened yet to change the tenor of the trading since yesterday afternoon during the 2:00 candle, but be preparing your plans in case the tenor does change.

Jeff Bailey : 10/25/2007 10:32:50 AM

EIA's Weekly Nat. Gas Storage Table at this Link ... Build of 68 Bcf.

Linda Piazza : 10/25/2007 10:31:16 AM

The Fed has announced another repo, this one of $6.000 billion. This results in a net drain of $9.000 billion for the day.

Keene Little : 10/25/2007 10:24:40 AM

We're hitting the first upside target I thought we should reach so the risk is a failure of the rally from here.

Linda Piazza : 10/25/2007 10:25:09 AM

The SPX's 10-sma is at 1529.51. If the SPX should rise that far, I'd be protecting bullish profits at that zone. If in bullish positions, I'd be making decisions right now about how I was going to deal with a test of the 10-sma from the underside, if it should occur. We had a pattern for a long while for the SPX to bounce, consolidate a few days, dip suddenly to the 10-sma and then bounce from it. The inverse of that pattern could be repeated if the SPX were to begin trending down, so watching what happens on such a test, if it should occur, would give us some information about the state of the markets. SPX blows right through the average and closes above it? Then the inverse pattern is not being instituted. SPX pierces the 10-sma but closes at or below it? Then there might be a chance the inverse of the pattern is being set up and I'd be careful of any bullish plays.

Jane Fox : 10/25/2007 10:23:09 AM

Internals are bullish now. Link

Linda Piazza : 10/25/2007 10:19:13 AM

Are you looking at the numbers Jane posted for the September New Home sales? See that 4.8 percent gain? Yippee! Good news, right? Only compare this month's better-than-expected sales of 770,000 to the previously reported August sales of 795,000, and you get a loss, not a gain. Only because August's numbers (and two more months') were revised sharply lower do we get that 4.8 percent gain.

Jeff Bailey : 10/25/2007 10:18:25 AM

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

Closed out the TEX-WP as stock approached, then exceeded target of $77.00.

Raised stop, then stopped on the USO at $68.40.

Keene Little : 10/25/2007 10:17:15 AM

We could be getting the 5th wave up already. With SPX now pressing above yesterday afternoon's high it will be bearish with a drop back below this morning's low.

Linda Piazza : 10/25/2007 10:12:28 AM

Keltner resistance on the 15-minute chart is now at 1520.80. I don't know that any of this matters, but the 9-ema's support certainly has. That 9-ema is now at 1511.35.

Jane Fox : 10/25/2007 10:09:27 AM

WASHINGTON (MarketWatch) - Sales of new homes rebounded in September from summer sales levels that were much weaker than previously reported, the Commerce Department reported Thursday.

Sales increased 4.8% to a seasonally adjusted annual rate of 770,000 from a revised 735,000 in August. Previously, August's sales had been reported at a 795,000 pace.

September's sales were slightly higher than the 758,000 pace expected by economists surveyed by MarketWatch.

The three previous months were revised sharply lower, which means the housing market was much weaker in the middle of the year than previous believed, and no one believed it was strong.

Keene Little : 10/25/2007 10:08:16 AM

This SPX 30-min chart shows how I've got the A-B-C bounce off Monday's low labeled. The c-wave up from yesterday's low needs to be a 5-wave move and that's why I'm expecting a consolidation before another leg up. Once the consolidation has finished I'll then be able to make a projection for the 5th wave (for equality with the 1st wave). I continue to think the SPX 1523 area makes for a good upside target for now. Link

Jane Fox : 10/25/2007 10:05:00 AM

U.S. Aug. new-home sales revised to 735,000 vs. 795,000

U.S. Sept. median sales price up 5% in past year

U.S. Sept. new-home inventory 8.3 months vs. 9 months

U.S. new-home sales rise 4.8% after big downward revisions

U.S. Sept. new-home sales 770,000 vs. 758,000 expected

Linda Piazza : 10/25/2007 10:02:25 AM

The SPX's 15-minute 9-ema is now at 1510.30, with other potential support at 1512.50-1513.00. A vaguely diamond-esque shape is forming at the top of the climb off yesterday afternoon's swing low, but I'm watching how the SPX behaves with respect to the 9-ema.

What happens if the SPX violates that 9-ema support on a 15-minute close? I'm not sure. Yesterday it blew through several potential resistance levels without pausing much to form consolidation zones that would give us that information. I see potential support near 1506.39 on a 15-minute closing basis, but it's not particularly significant support for the SPX on this interval (15-minute) chart, so I don't know that it will have much significance. Below that, though, support definitely begins thinning out, allowing for but not promising a potential downside target of 1500.38. Don't count on any of this being met because this could be part of a chopping around action prior to zooming higher again or just prior to . . . more chopping around.

Jane Fox : 10/25/2007 10:00:49 AM

Remember the 10:00 Existing Home sales today.

Jeff Bailey : 10/25/2007 9:58:36 AM

Murphy Oil (MUR) $73.29 -4.87% ... getting whacked.

Jane Fox : 10/25/2007 9:58:21 AM

The DOW and S&P futures are respecting their overnight lows so far but both the NDX and RUT have broken through their respective lows. Link

Jeff Bailey : 10/25/2007 9:56:40 AM

Swing trade stopped alert! for the 1/2 position in the US Oil Fund (USO) $68.40 +0.60%

Jane Fox : 10/25/2007 9:54:18 AM

WASHINGTON (MarketWatch) -- The Bush administration slapped new sanctions on Iran Thursday in a bid to hobble its pursuit of nuclear and ballistic missile programs and Tehran's support for terrorism.

Treasury Secretary Henry Paulson said the U.S. is sanctioning Iran's Bank Melli, Bank Mellat and Bank Saderat.

The move prohibits U.S. citizens from doing business with the banks and freezes any assets the banks have under U.S. jurisdiction.

"These are three of Iran's largest banks and they all have facilitated Iran's proliferation activities or its support for terrorism," Paulson said in a statement

Jeff Bailey : 10/25/2007 9:52:59 AM

DXY looks like it wants to go to WEEKLY S1 (77.06)

Linda Piazza : 10/25/2007 9:52:26 AM

As you're making trading decisions, remember the September New Home Sales due out in a few minutes, at 10:00.

Jeff Bailey : 10/25/2007 9:51:31 AM

US Dollar Index (DXY) 77.26 (30-minute delayed) ...

Linda Piazza : 10/25/2007 9:50:18 AM

The USDJPY has dropped to 114.08, reversing some but not all of the post-Nikkei-close gains that were seen in the overnight period. It dropped nearly to the rising trendline off yesterday's 11:15 low. It is attempting to bounce from that. The low since our markets opened was 113.98, just a few cents above that rising trendline. I would consider a sustained violation of that trendline a negative for equities, but a new low below 113.79 would need to be produced to confirm weakness.

Jeff Bailey : 10/25/2007 9:47:56 AM

Swing trade long raise stop alert! ... for the 1/2 position in the US Oil Fund (USO) $68.53 +0.80% ... to $68.40.

Linda Piazza : 10/25/2007 9:46:33 AM

The Fed has announced another repo in the amount of $19.000 billion, leaving a net drain of $15.000 billion for the day when this is added to the previous $6.000 billion repo.

Jane Fox : 10/25/2007 9:43:11 AM

VIX is making new daily highs supporting the S&P's futures new daily lows.

Jeff Bailey : 10/25/2007 9:42:35 AM

Terex (TEX) $76.01 -8.13% ... TEX-WP $5.50 x $5.80.

Good trade! Good tie to reaction from CAT's earnings.

Jeff Bailey : 10/25/2007 9:39:52 AM

TEX $76.16 TEX-WP $5.00 x $5.50.

Keene Little : 10/25/2007 9:39:23 AM

If the market has a little higher to go before finishing its bounce off Monday's low then we will probably first see a pullback consolidation this morning before getting another leg up. It could be a choppy ride so don't rush any trades.

Jeff Bailey : 10/25/2007 9:38:53 AM

Swing trade put exit alert! for the one (1) Terex Corp. TEX Nov. $80 Put (TEX-WP) at the bid of $4.80.

TEX $77.13 -7.00%

Jeff Bailey : 10/25/2007 9:35:32 AM

Swing trade long cancel order alert! ... Please cancel the order from yesterday's extended session to purchase 100 shares of Terex Corp. (TEX) for $75.01.

Linda Piazza : 10/25/2007 9:33:24 AM

Stronger SPX 15-minute Keltner resistance is near Tuesday's high, at 1519.87 on 15-minute closes, with lighter resistance just below that at 1517.47 on 15-minute closes. This should be important resistance, but until and unless the SPX begins closing 15-minute periods below the 9-ema now at 1510.10, it continues to keep a target set for that higher resistance zone.

Jane Fox : 10/25/2007 9:32:55 AM

AD line is a neutral +232 so the market could go either way.

Jane Fox : 10/25/2007 9:28:49 AM

On the other hand, Crude's MACD is supporting the bounce off support. Link

Jane Fox : 10/25/2007 9:27:47 AM

Gold is doing well but I am still concerned about the MACD, it is not supporting this bounce off support and the bounce may fail. Link

Jane Fox : 10/25/2007 9:29:50 AM

US$ down, Gold up and crude up so all is well in these markets since I am long both Gold and Crude.

Notice the US$/Yen currency pair is supporting the bullishness in the equity markets. Link

Keene Little : 10/25/2007 9:26:02 AM

Equities got a nice lift after the European markets opened but have given back half their gains. Techs look a little stronger again as we near the open.

Gold has followed oil (and the dollar dropped further) and I got stopped out of my short at 770. I took away 3.50 and now watching this bounce to see if it's going to fail at a retest. I'm going to try a short (YG) here at a test of the 773.10 level could be it for the bounce--two equal legs up from its low on Monday. Stop for now will be at a new high so 776.50.

Jane Fox : 10/25/2007 9:21:54 AM

The major American equity index futures markets broke their previous day highs overnight and the higher high at 7:30 now needs a higher low to set the trend. Link

Jane Fox : 10/25/2007 9:16:51 AM

WASHINGTON (MarketWatch) -- The average number of workers filing initial state unemployment claims over the past four weeks rose by 7,750 to a seven-week high of 324,750 last week, the Labor Department reported Thursday.

Initial claims in the week ended Oct. 20 fell by 8,000 to 331,000, the agency said. This only partially reverses the 30,000 increase in claims in the previous week

Linda Piazza : 10/25/2007 9:14:46 AM

I don't have a good feel for the markets right now. In the past, I often tried to force an opinion at times like these, feeling that the fault was mine. Sometimes it was, but I gradually began to recognize that on many of those times when I was having difficulty discerning a likely direction, the market produced choppy action. Perhaps the fault wasn't all mine? So, I no longer try to force an opinion when I don't believe that I have a good feel for the action. Instead, I tend to take a more cautious stance and realize that I might be picking up on uncertainty among bigger market participants. When I was still day trading, I might opt to use that hour or day or week to study a new technical analysis indicator or read the Q&A's on CBOE's educational site or paper trade a new type of trading technique I was considering. I'm going to try to limit my posts today because, although I might think I'm making it clear that the action is confusing and technical analysis perhaps less useful than usual, I know from experience that someone out there reading what I'm writing thinks I'm really writing in support of his or her anticipated entry or encouraging him or her to persist in a trade when that wasn't my intention. I don't want to be leading anyone astray.

Here's what I'll personally be watching: Is it possible that the SPX is setting up a wide consolidation band, one that will form daily closes below the 10-sma (actually, I'm also watching the 9-ema) and above the 50-sma (actually, I'm also watching the 120-ema)? Sometimes when charts are difficult to interpret, we're in the beginning stages of the building of a consolidation zone, so I'm watching to see if that's a possibility. If so, trading within that consolidation zone will be difficult due to the choppy trading conditions.

Jane Fox : 10/25/2007 9:13:39 AM

WASHINGTON (MarketWatch) -- The housing market is just getting worse. Home resales tumbled 8% in September to the lowest levels in this decade, prompting the obvious question: When will it all end?

The honest answer is no one knows. Optimists have been saying for more than a year that the worst is behind us, while the pessimists have been saying recovery is still a year, or years, away.

So far, the pessimists have been right about the weakness in the housing market, but their forecast that the collapse in housing would lead to a general economic malaise has, at least so far, failed to pan out. The economy has slowed, but has not fallen into recession, as consumers and investors adjust to a world in which home prices don't automatically rise 5% or 10% a year.

The only thing that's clear now is that the housing market has gotten worse since the spring. The market was in a free fall in September. Sales of existing home fell 8%, while inventories of unsold homes rose to a 10.5-month supply. It could take 320 days for a home to sell

Jane Fox : 10/25/2007 9:12:33 AM

WASHINGTON (MarketWatch) -- Demand for defense goods tumbled in September, pushing down orders for durable goods for a second month in a row, the Commerce Department reported Thursday.

Total orders fell 1.7% after a revised 5.3% decline in August.

Economists surveyed by MarketWatch were expecting orders to rise 1.1%.

Details of the report were more encouraging. Orders for core capital equipment goods rose 0.4%, boosted by strong demand for machinery. Aircraft orders bounced back robustly.

Linda Piazza : 10/25/2007 9:03:13 AM

The Fed has announced a repo in the amount of $14.000 billion, so far leaving a net drain of $34.000 billion, still a hefty amount. I'll check again after the usual repo announcement time in about forty minutes.

Linda Piazza : 10/25/2007 8:20:33 AM

What happened overnight with the USDJPY? At first, while the Nikkei was open, the currency pair dipped again, dropping to the rising trendline off yesterday's two swing lows. About the time the Nikkei closed and European markets opened, the currency pair began climbing again, and it's now at 114.36, testing a resistance level that extends up to about 114.50-114.60. This climb is a little bit suspect, however, because neither currency pair's home markets were trading during the climb. I do like to include overnight action because the Nikkei is trading part of that time and what happens when Japanese market participants and central bankers are awake can be as important as what happens during our trading period and can happen on as much or more volume. However, that period between the closing of the Nikkei and the opening of our markets should perhaps be given a little less weight. It will be important to see this morning whether the gains are built upon or whether the currency pair begins rolling over. Although I'm not sure this currency pair has the same relevance it once did, U.S. equity traders would still prefer that it be moving in the direction of their trades.

Linda Piazza : 10/25/2007 7:32:39 AM

Four repos mature today, a total of $40.000 billion. We'll see later what the Fed intends to do.

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