Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
Jeff Bailey : 11/2/2007 1:54:24 AM

DXY 76.666 +0.24%

CL07Z $93.86 +0.39% ... see you in the morning!

"We are ready for an unforseen event that may or may not occur." -- Al Gore, VP

Jeff Bailey : 11/2/2007 1:15:12 AM

US Dollar Index (DXY) ... with updated MONTHLY Pivot retracement. Sorry about the blue weekly, but that's there as WEEKLY S1/MONTHLY 76.71 is rather important right now. Link

Today's jobs report will be very important. A strong number of jobs may sway traders into BUYING the dollar, thinking "no Fed rate cut in December, economy steady."

Dollar has some tie with oil (you should be able to see it with the MONTHLY Pivots).

GG, FCX and DUG probably NEED a strong dollar to perform as profiled.

Jeff Bailey : 11/2/2007 1:02:46 AM

cl07z with updated MONTHLY Pivot retracement, as well as a "what if $100" anchored at the August low close Link

The dashed red lines are prior closes, where a close ABOVE that level brought in buyer (bulls and bears covering) to a next level of reward/risk.

Jeff Bailey : 11/2/2007 12:33:57 AM

Right now, I feel my MM Profiles are WAY TOO FAR to the bearish side.

MFE-MH , GG-XG, FCX-XC, DUG and HBC-WT.

XLF-LG and MO-LN are only bull trades.

I'll be playing the MFE-MH, FCX-XC, DUG and HBC-WT rather carefully near-term.

Account management has me ranking DUG as greatest amount of capital exposed, and to be honest, bulk of today's action was MARKET weakness. That's it. Dollar strength wouldn't hurt an energy bear here at all. Dollar weakness is just ANOTHER reason to be holding oil up here, eyeballing $100.00 a barrel.

No?

Take a retracement on either the December, or January NYMEX crude chart from the August lows and drag the 100% up to $100.00. If you're short oil futures at this point, you're still probably not liking what you're seeing.

Yesterday, when I showed you the EIA crude oil inventory table and noted the seasons, that's got to be at least one reason oil is so short. BEARS were figuring that the seasonal pattern of supply BUILD would begin in September at the end of the driving season. Didn't quite work out that way and each weak's EIA report and wonderment for a BUILD has the bear's head in a vice.

Jeff Bailey : 11/2/2007 12:17:33 AM

S&P 500 ($SPX) Link ... building what begins to look like a triangle pattern at this point. Needs a MINIMUM of 5 columns (building 4th column) for either a bullish, or bearish triangle.

StockCharts.com's S&P 500 Bullish % ($BPSPX) down 1.4% today at 59.80%.

Dorsey/Wright's BPSPX was down 1.4% too, but 58.64%. Dorsey's is "more accurate" in my opinion as they don't adjust past stock price values lower when a stock pays a dividend.

Point here would be that we have to lean slightly toward the BEARISH side with the bullish % falling.

PRICE is what matters most, and should the SPX itself whip back higher an unleash the BULLISH TRIANGLE (1,560), then we would look for the bullish % to reverse back up from "bull correction" to "bull confirmed" and buy, buy, buy to year's end.

Keene Little : 11/1/2007 11:09:22 PM

Friday's pivot tables: Link and Link

A reversal of a reversal. Gotta love post-FOMC price action (if you can get on the right side of the trade that is). I'll show just one chart tonight because I think it could be the most telling for us depending on what happens next. The SPX daily chart shows today's decline stopped just shy of the uptrend line from August through the October low. That trend line hasn't really been tested yet but a bounce from here would certainly do it: Link

There are a lot of reasons why I like a market top here (this month--Oct 11 for SPX and the others, Oct 31 for NDX) not the least of which has to do with the symmetry of the market here and the Fib time and price correlation, as I posted late Wednesday night). But until SPX breaks below 1490 I have to still consider the possibility that the market is not finished putting in its final high.

Topping is a process and this one has about worn me out. They're volatile, full of whipsaws, full of bearish divergences that go on and on, etc. and while I don't believe we have a new high coming I will continue to show the possibility until 1490 gets taken out now. And that means bears can't get complacent here.

If the market drops lower on Friday, two equal legs down from Wednesday's high is at 1497.55 and getting through that level would tell me we'll likely take out 1490. If we instead get a bigger bounce that rallies above 1525 then prepare for more chop and whipsaws.

OI Technical Staff : 11/1/2007 10:59:56 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 : 11/1/2007 6:04:32 PM

Closing U.S. Market Watch found at this Link

This after another 25 bp rate cut, plus today's $41B Fed infusion.

Jeff Bailey : 11/1/2007 5:57:14 PM

The "$1.40" I mention again today, and a number that keeps popping up for the XLF options is something I saw Friday morning (10/26/07) when the XLF gapped higher, and while there was a lot of buying at that CBOE offer (other offers were $1.60), but it really has to say that there's a DETERMINED seller around the XLF $34.00 level, but more likely the BIX.X 340.50 level, as the BIX.X closes at a new 52-week low. Here's the chart of the BIX.X from Monday's Wrap Link

Now, on Friday, some of the "things said" by some of the mortgage broker CEO(s) had me thinking ... "He's either putting one foot in jail, or all the write-downs are on the table."

CEO's should know today, that Enron and WorldCom changed things.

Today's further drubbing among the bank/mortgage lenders, sure doesn't have the look that the MARKET believes all that was said.

Then there's tomorrow.

Jeff Bailey : 11/1/2007 5:28:45 PM

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

Note!!!!: the FCX-XC profiled on 10/30/07 is a LONG (purchased). In last night's update, there was a "negative sign (-1)" for #Shares.

Jeff Bailey : 11/1/2007 4:19:13 PM

Anyone get the feeling based on what you've seen in the XLF calls that market participants are selling covered calls like crazy? Take note if we ever get a significant gap day higher.

Surprised today's low in the XLF-LG wasn't $1.09. High was $1.40.

Jane Fox : 11/1/2007 4:15:26 PM

Economic Reports on the docket for tomorrow include:

8:30a.m. Oct Nonfarm Payrolls. Expected: +80K. Previous: +110K.

8:30a.m. Oct Unemployment Rate. Expected: 4.7%. Previous: 4.7%.

10:00a.m. Sep Factory Orders. Expected: -0.5%. Previous: -3.3%.

Jeff Bailey : 11/1/2007 4:15:37 PM

Swing trade put establish stop alert! ... for the HSBC Holdings HBC Nov. $100 Put (HBC-WT) at $98.10 in the underlying.

HBC goes out $95.52 -4.01% ... HBC-WT close $5.10 x $5.40.

Jeff Bailey : 11/1/2007 3:55:45 PM

5-minutes until close.

Jeff Bailey : 11/1/2007 3:55:12 PM

Day trade short cover alert! for HBC at the offer of $95.38.

Linda Piazza : 11/1/2007 3:41:35 PM

The SPX and OEX have both now hit their downside targets on the 15-minute charts. I'm going to roll up into the 30-minute charts now. Until and unless the SPX begins forming 30-minute closes above the 30-minute 9-ema at 1521.21, the short-term trend is down.

However, we're about to get market-on-close orders. We won't see them, but the big money people will. Tomorrow delivers one of the most important economic numbers of the week and perhaps the month, the non-farms payrolls. Bankrate said today that this number will impact the mortgage rates more than yesterday's FOMC decision, just to give you an idea of how much reliance people are putting on this number. So, if you've got big profits today, think about whether you want to keep them at risk during the overnight period. If you're in options, you won't get a chance to adjust before the number comes out. I don't know what the number will be or how the markets will react. If I were in big profits before that number was hit and my play was intended to be a short-term one, I might be taking partial profits and leaving a portion to run, depending on how much I had at risk, whether I was going to be able to sleep overnight, whether I was going to be able to monitor the markets the next day. If I wasn't going to be able to be at my computer, I probably would have taken all profits, for example. There's no one right or wrong answer. Some charts point to much lower targets, but bears are still skittish and quick to cover and bulls are still not cut up too much by down days, so they may be quick to buy any dip. There's just no way of predicting right now, but this was clearly a very bearish day.

Jane Fox : 11/1/2007 3:37:42 PM

Should have just listened to the VIX and took only short setups today.

Jane Fox : 11/1/2007 3:37:19 PM

The internals have not eased up one little bit today and have talking been loud and clear. I tried to grab a little on the long side hoping for a quick move upward before it resumed its downward trend (VIX and AD volume were telling me down was the order of the day) but I was stopped, albeit for not too much Link

Jeff Bailey : 11/1/2007 3:33:22 PM

NFI $4.96 ... gives up $5.00.

Jeff Bailey : 11/1/2007 3:33:04 PM

Day trade short lower stop alert on HBC $95.69 -3.85% ... to $96.10.

Linda Piazza : 11/1/2007 3:28:46 PM

A descending channel is beginning to be formed on the SPX's 30-minute chart with top resistance at the 30-minute 9-ema rather than the 15-minute one. The 30-minute 9-ema is now at 1523.26. What does this mean? The tenor for the day has not changed until and less the SPX closes a 30-minute period above this.

Linda Piazza : 11/1/2007 3:27:24 PM

The SPX's daily 10-sma isn't providing support any longer. The SPX's downside target is now located at 1511.88; the OEX's, 707.31.

Jeff Bailey : 11/1/2007 3:26:29 PM

VIX.X 22.25 +20.07% ...

Jeff Bailey : 11/1/2007 3:25:29 PM

INDU -304

Jeff Bailey : 11/1/2007 3:25:07 PM

It's looking like a bid-puller into the close.

Jane Fox : 11/1/2007 3:21:34 PM

All markets but NQ making new daily lows. Link

Jeff Bailey : 11/1/2007 3:15:40 PM

10-year ($TNX.X) finished down 11.4 bp at 4.361%.

Looked like money was coming out nicely yesterday. Then Keene had to pile on an agree with me. (wink)

Jeff Bailey : 11/1/2007 3:11:56 PM

Just as ... what C $38.62 -6.62% is doing down here doesn't make sense.

Jeff Bailey : 11/1/2007 3:11:12 PM

Check out you Level II's on both Novastar (NFI) $5.03 -4.73% and HSBC (HBC) $96.29 -3.24% ...

CBOE bid/ask is parked at $4.73 / $5.20 on NFI and $93.13 / $99.16 on HBC.

That sharp decline in HBC supposedly due to subprime exposure with NFI.

What HBC is doing up here doesn't make sense to me.

Linda Piazza : 11/1/2007 2:55:11 PM

Once again, the daily 10-sma's support for the SPX prices trumps anything shown on a 15-minute chart. The SPX is resisting staying below that 10-sma. Important resistance now ranges from 1528.37-1530.75, if the SPX should rise that high. A double-bottom confirmation would be at 1531.01, but be careful of such a seeming confirmation that is then reversed below that 1530.75 resistance by the close of a 15-minute period.

Jeff Bailey : 11/1/2007 2:36:08 PM

NHC- Tropical Storm Warning Dropped For SE Florida Coast

Jeff Bailey : 11/1/2007 2:23:21 PM

For those day traders using my "Lower 5-MRT" technique, when a NYSE listed stock has a delayed opening, I like to use the next 5-minute bar for Red #1. In the case of HBC, that would be the 09:35-40 AM EDT bar's low of $96.15.

Jane Fox : 11/1/2007 2:14:41 PM

SPX is testing its 50EMA again. Link

Jane Fox : 11/1/2007 2:12:12 PM

Certainly should have followed my motto today, "Follow the VIX and the money will follow you." Link

Keene Little : 11/1/2007 2:11:41 PM

Unfortunately I have to leave for the rest of the trading day. One thing to stay aware of is that it's possible we'll still get a larger leg up as part of a larger consolidation pattern (and if so it will be a sharp rally). Chase this leg down with fairly close stops until it gets going. So far this morning's lows are holding. Good luck and I'll update charts this evening.

Keene Little : 11/1/2007 2:07:02 PM

LOL, you're right Linda. For you youngsters out there, George Burns and Gracie Allen used to have a show (back in the B&W TV days) and George would sign off each show with "Say good night Gracie". It's like Walter Cronkite's "And that's the way it is...". You do know who Walter Cronkite is, right?

Linda Piazza : 11/1/2007 2:01:50 PM

Keene, you're getting way too old. I bet one in five don't understand the reference in your 1:59:16 post. Oops. I did. Must make me old, too.

Keene Little : 11/1/2007 2:00:12 PM

Gold is trading in synch with equities (still) and it just broke down from its consolidation pattern as well. New lows should be coming for that one as well.

Linda Piazza : 11/1/2007 1:59:34 PM

The SPX's potential target and next support has risen to 1512.56 on 15-minute closes. The OEX's, 707.59. First, each has to get below the previous LOD.

Keene Little : 11/1/2007 1:59:16 PM

Say goodnight Gracie.

Jeff Bailey : 11/1/2007 1:49:00 PM

Day trade short alert! ... for 1/2 position in HSBC Holdings (HBC) at the bid of $96.32 -3.21% ... stop goes $97.00. Target $95.00.

Jeff Bailey : 11/1/2007 1:47:14 PM

Swing trade put alert! ... for one (1) of the HSBC Holdings HBC Nov. $100 Puts (HBC-WT) at the offer of $4.60.

No stop for now, target $90 in the underlying.

HBC $96.33 -3.20% ...

Jeff Bailey : 11/1/2007 1:34:28 PM

Northern Rock Borrows GBP2.2 Billion From BOE In Wk To Oct 31

DJ- The part of the Bank of England's balance sheet that would register any loans to distressed U.K. lender Northern Rock PLC (NRK.LN) grew GBP2.21 billion in the week to Oct. 31, figures from the central bank showed Thursday.

The "other assets" category had risen to GBP35.99 billion by Wednesday, from GBP33.78 billion in the week to Oct. 24, the balance sheet indicated.

The growth over the week to Wednesday follows gains of GBP4.65 billion in the week to Oct. 24, GBP3.05 billion in the week to Oct. 17, GBP2.2 billion in the week to Oct. 10, GBP2.91 billion in the week to Oct. 3, GBP4.87 billion in the week to Sept. 26 and GBP2.88 billion in the week to Sept. 19.

Analysts said it's unusual for the value of the "other assets" section to rise sharply, and that the amount had remained in a GBP11 billion-GBP14 billion range over the year to September.

The gains in the other assets section suggest Northern Rock could have borrowed as much as GBP23 billion using its special credit facility with the bank.

The BOE said Sept. 14, that it had provided Northern Rock with a credit facility to help fund its operations during the global liquidity crisis. It's also allowing the company to borrow against all of its assets, marking a significant loosening in the central bank's normal collateral requirements.

Keene Little : 11/1/2007 1:32:18 PM

So far these sideways consolidations look like continuation patterns and as such I expect to see a breakdown from them.

Jeff Bailey : 11/1/2007 1:24:55 PM

FORD US SALES FALL 9.5%; TOYOTA EDGES HIGHER

DJ- U.S. auto maker's October U.S. total vehicle sales fall to 195,462 cars and trucks as car sales plunge 26%. It raises its 4Q production target by 5,000 vehicles to 645,000. Toyota's U.S. sales rise 0.5% to 197,592 vehicles.

F $8.71 -1.80% ...

TM $114.90 +0.40% ...

Linda Piazza : 11/1/2007 12:53:19 PM

The OEX's resistance is from 716.11-717.11 on 15-minute closes.

Linda Piazza : 11/1/2007 12:52:52 PM

So far, the SPX's resistance, now from 1531.86-1533.66 has held on 15-minute closes. The SPX appears to be forming up a rising channel off the day's low, a possible bear flag. We've seen a number of those "bear flags" result in prices running sharply higher, though, so please don't assume that such a flag's implications will be realized. Continue to watch that potential resistance.

Jeff Bailey : 11/1/2007 12:36:12 PM

StreetTracks Gold (GLD) $78.23 -0.49% ... use the $0.40-box to match $4-box of futures. Link ... The "B" is the first chart entry for November.

PnF measures time as January-September with 1-9, then Oct-Dec with A-C.(Can't fit two digits in a box).

Keene Little : 11/1/2007 12:35:54 PM

Even though the 2nd leg of this bounce hasn't achieved equality (or higher), it has met the minimum. So any drop now back below the recent dip near 11:40 AM would be bearish. It could mean we're going to chop sideways before heading to new lows, or be part of a larger upward correction so chasing it lower could be dangerous. But using bounces after that kind of drop would be a way to enter a short and minimize your risk (by lowering your stop as soon as it rolls back over).

Jeff Bailey : 11/1/2007 12:26:12 PM

Freeport McMoran (FCX) $114.50 -2.70% ... used to be a "gold miner," but recent acquisition of Phelps Dodge gives it the "gold/copper" blend.

So, it will likely have some dollar impact (gold), but some weaker commodity (copper).

Keene Little : 11/1/2007 12:26:08 PM

If the 2nd leg up in this morning's bounce goes to 162% of the 1st leg up that gives us upside targets of DOW 13819 (which is on top of its 50% retracement) and SPX 1538.52. For SPX the intersection of the broken uptrend line from October 24th and its previous downtrend line is at 1535.30 so if 1532 gives way to the bulls I'd be looking for 1535-1538 as a potential upside target, and keep an eye on DOW 13800.

Keene Little : 11/1/2007 12:22:39 PM

More bad real estate news from the field (albeit an area experiencing a worse problem than most currently--Phoenix): A loan officer with 20 yrs experience in my Phoenix mkt..just confessed to me he has not had a new loan in over 2 months. He has a great realtor base too. This is shocking to me and awful and frankly unemployment in my books. Multiply him by how many others and it is MUCH worse than I thought.

Thanks for the info Denise.

Jeff Bailey : 11/1/2007 12:21:02 PM

December Copper (hg07z) $3.38 -2.59% Link ... Updated with today's action at $3.40. I have an alert set at $3.28, which is just on the bullish support trend.

Linda Piazza : 11/1/2007 12:13:56 PM

On its 15-minute chart, the next resistance range for the OEX, other than the 15-minute 9-ema that's being tested now, is from 716.23-717.61.

Linda Piazza : 11/1/2007 12:13:18 PM

I consider it potentially bearish that the SPX climbed right up the underside of the rising channel line that I've had drawn on my SPX charts for months and this morning fell away steeply, but . . . there's a big "but" here. As long as the SPX is again maintaining daily closes above its 10-sma and above 1518-ish historical support, it's possible that the SPX could just establish another rising channel that climbs the underside of that former channel line. It's happened before, after February's decline, for example, and why shouldn't bulls be buying any dip, bulls could reason? It's worked so far. I think it would take a more pronounced dip than this one to discourage such dip buying.

So as the lunchtime lull begins, that resistance that's forming from 1532.13-1534.68 becomes more important to watch. The 15-minute 9-ema is lower, about 1528.30, but that typically flattens out during the lunchtime lull and allows the SPX to cross it again after it had been providing either support or resistance during the morning. Today, it's been resistance. This process usually encourages a test of the other side of the smaller Keltner channel during the lunchtime lull, and the other side of that channel is in that resistance range that I mentioned.

Keene Little : 11/1/2007 12:03:48 PM

So far I'm thinking wave-a up, wave-b pullback and then we need wave-c up. Two equal legs up for that kind of move would be to DOW 13771 (shy of its 38% retracement at 13783) and SPX 1532.15, right on top of its 38% retracement. That's the level I'd watch for a short play to set up. It might be only part of a larger upward correction (or it might not even stop there) but obviously that won't be known until we get there.

Jeff Bailey : 11/1/2007 12:01:16 PM

Disk Drive's DDX.X 147.69 +0.01% ... inch green.

Linda Piazza : 11/1/2007 11:59:15 AM

The SPX is still sitting right on its daily 10-sma. Bears can't be too complacent if it looks as if that daily support will hold. Just know where your stops should be and adhere to them, if they haven't already been hit.

Jeff Bailey : 11/1/2007 11:47:30 AM

UltraShort Oil & Gas fact sheet Link

Jeff Bailey : 11/1/2007 11:46:13 AM

Swing trade BEARISH long alert! ... for 1/4 position in the ProShares UltraShort Oil & Gas (AMEX:DUG) at the offer of $40.35 +2.59% ... Stop goes $37.90. Target $46.90.

Linda Piazza : 11/1/2007 11:44:52 AM

During the last 15-minute period, the SPX again managed a close above the support level now at 1525.37, but now it's slipping below that support again after having touched the 15-minute 9-ema now at 1528.45. It's falling away from that test and may, this time, close below that 1525.37 level. If so, that reinstitutes that lower target, now at 1510.72, but you know that target was not met when it was set earlier. Be careful about expectations.

Jane Fox : 11/1/2007 11:38:07 AM

Stopped at 13731

Jeff Bailey : 11/1/2007 11:33:59 AM

ALTRIA TO BUY JOHN MIDDLETON FOR $2.9B

DJ- Altria Group will pay $2.9 billion to buy manufacturer of machine-made large cigars. Net cost of acquisition, after deducting about $700 million in present-value tax benefits arising from the terms of the transaction, is $2.2 billion.

MO $72.67 -0.35% ...

Jane Fox : 11/1/2007 11:33:21 AM

Stop to 13731

Jeff Bailey : 11/1/2007 11:28:40 AM

MARATHON OIL 3Q NET FALLS ON CRUDE COSTS

DJ- Oil and gas company's 3Q earnings fall to $1.02 billion, or $1.49 a share, from $1.62 billion a year earlier, hurt in part by increases in crude costs in its downstream segment. Revenue rises to $16.95 billion from $16.63 billion.

MRO $59.26 +0.21% ...

Jeff Bailey : 11/1/2007 11:27:25 AM

KODAK POSTS 3Q PROFIT AMID RESTRUCTURING

DJ- Camera and film company earns $37 million, or 13c, compared with a year-earlier loss of $37 million, helped by higher margins and lower costs. Sales slip 0.5% to $2.58 billion. Digital sales rise 12%, while more traditional revenue falls 16%.

EK $28.43 -0.80% ...

Keene Little : 11/1/2007 11:25:25 AM

Moving back out to the SPX 60-min chart, to show how the potential price pattern that I showed on the 5-min chart (9:59) would look, a bounce back up to the 1533 area could find resistance at the previous downtrend line from Oct 11th (and be a little more than a 38% retracement of the decline from yesterday): Link . A bounce all the way back up for a retest of its broken uptrend line from Oct 24th could get it back up near 1540 which would be a 62% retracement. Any rally back above 1545 would strongly suggest new highs are on their way.

Jeff Bailey : 11/1/2007 11:23:27 AM

Want to see some wide option spreads ... check out the CS puts and calls.

Jeff Bailey : 11/1/2007 11:20:27 AM

CREDIT SUISSE 3Q NET SLIPS ON WRITEDOWNS

DJ- Zurich-based bank reports a drop in 3Q net profit to CHF1.30 billion, from CHF1.89 billion last year, hit by CHF2.2 billion in investment banking write-downs for unsold leveraged loans, structured products.

CS $63.96 -5.52% ...

Linda Piazza : 11/1/2007 11:19:25 AM

So far, the SPX's 15-minute 9-ema has held as resistance, with that now at 1529.49. Higher and presumably stronger resistance at 15-minute closes is currently at 1532.42. However, support near 1526.35 has also held on 15-minute closes over the last 45 minutes of so. It's being violated by a few cents as I type, and bears would of course like to see a lower low rather than a clinging to this support.

Jeff Bailey : 11/1/2007 11:18:15 AM

NYMEX 3Q NET JUMPS 54%, MAY SELL BUILDING

DJ- Earnings climb to $62.57 million, or 66c a share, as revenue rises 25% to $173.2 million. Board approves special dividend of $100 million and company plans to sell its lower Manhattan building by the end of next year.

NMX $130.49 +1.53% ...

Jeff Bailey : 11/1/2007 11:16:53 AM

KBR 3Q NET SOARS ON GAINS, CHARGES

DJ- Engineering, construction and infrastructure firm's net income rises ninefold to $63 million, or 37c a share, as gains and charges skew comparisons. Revenue drops 2% to $2.18 billion. Wall Street expected EPS of 32c.

KBR $39.50 -7.88% ...

Jeff Bailey : 11/1/2007 11:15:48 AM

ACA MAY BE NEXT HAZARD IN CREDIT CRUNCH

DJ- Credit default swaps, an exotic form of bond insurance, could be the next hidden hazard to blow up in the global credit market minefield, with ACA Capital sparking the explosion, Businessweek reports.

ACA $3.38 -2.31% ...

Jeff Bailey : 11/1/2007 11:14:37 AM

EUROPEAN STOCKS SLIDE AMID FURTHER US RATE CUT DOUBTS

DJ- European stocks take a hefty tumble amid mounting concerns that slowing economic growth will begin to eat into corporate profits. An oil price perched near the $100 a barrel mark is also weighing on sentiment. Traders say the spark for the selloff is a mounting concern about the health of corporate profits on both sides of the Atlantic. London slides 2.2%, while Frankfurt sheds 1.9% and Paris falls 2.3%.

Jeff Bailey : 11/1/2007 11:13:51 AM

EXXON MOBIL 3Q NET FALLS 10% ON WEAK MARGINS

DJ- Oil giant's earnings slip to $9.41 billion, or $1.70 a share, missing expectations by a nickel a share, on lower refining and chemical margins. Firm sets a quarterly revenue record of $102.34 billion on soaring crude prices. Earnings at its downstream business, which buys crude and which converts it to products like gasoline, fall 31% to $1.9 billion.

XOM $89.61 -2.58% ...

Jane Fox : 11/1/2007 11:02:43 AM

STop to 13729 now, we want to keep a watch on this trade because it is a reactionary bounce and not a reversal - at least according to the internals.

Keene Little : 11/1/2007 10:58:03 AM

The current bounce looks to be the one correcting the decline from yesterday. Once it has a 3-wave form to it there will be another opportunity to short it in case it heads for new lows. Watch for a 38%-62% retracement for resistance. The risk will be a continuation higher if we've now started the next rally leg.

Linda Piazza : 11/1/2007 10:56:55 AM

Bears would rather the SPX not have produced a 15-minute close above that 1526.13-ish level. It's possible that the 15-minute 9-ema at 1530.96 and the 120-ema at 1532.60 will now be tested. If the SPX manages 15-minute closes above those, then the tentative downside targets are erased and another potential target bites the dust. So far, it hasn't happened, so this is a particularly iffy time.

Jane Fox : 11/1/2007 10:56:11 AM

You can raise the stop to 13722 now, a whole 3 ticks.

Jeff Bailey : 11/1/2007 10:55:17 AM

Sector Losers Homebuilders -4.06%, Banks -3.74%, Brokers -3.02%, Gold Bugs -2.46%

Jeff Bailey : 11/1/2007 10:55:13 AM

Sector Winners ... Treasuries, Dollar +0.42% and Oil Service +0.17% ...

Jeff Bailey : 11/1/2007 10:46:48 AM

Collars In Link

Jane Fox : 11/1/2007 10:45:51 AM

Stop to 13719 - raise it 10 ticks.

Jane Fox : 11/1/2007 10:44:00 AM

STop is now 13709.

Jane Fox : 11/1/2007 10:42:58 AM

Once YM gets to 13765 I will raise my stop to 13709.

Jane Fox : 11/1/2007 10:40:55 AM

I am now long YM from 13752 with a stop at 13689. Target is 13810.

Jane Fox : 11/1/2007 10:38:16 AM

This trade is not for the faint of heart, you may get some heat.

Jane Fox : 11/1/2007 10:37:40 AM

So if you are brave you can try a YM long at 13752 with a stop at just below daily lows. This is a risky trade because the stop is so far away but we could get a nice bounce.

Jane Fox : 11/1/2007 10:35:07 AM

The granddaddies, VIX and AD volume, are still telling me the bears have control but the AD ratio, USDJPY and DAX are saying we may see a little rally here. Not a reversal type rally but a reactionary bounce. Link

Jeff Bailey : 11/1/2007 10:33:57 AM

Oil inventories "should be" rising this time of year. Nat. Gas inventories "should be" falling.

Jeff Bailey : 11/1/2007 10:33:11 AM

EIA: Weekly Nat. Gas Storage Table Link ... Build of 66 Bcf

Jeff Bailey : 11/1/2007 10:28:25 AM

US ISM Oct. Mfg Business Index 50.9

DJ- The Institute for Supply Management, a private research group, said Thursday that its index of manufacturing activity moved to 50.9 in October, from 52.0 in September and 52.9 in August. Readings above 50 point to expansion in activity. Economists polled in a survey by Dow Jones Newswires had expected the October index to hit 51.6.

In the report, the group described a pickup in inflationary pressures, with the prices index standing at 63.0, versus the prior month's 59.0.

Production cooled in October, with that measure standing at 49.6, from the prior month's 54.6, while the new orders index came in at 52.5, from September's 53.4.

The ISM's manufacturing employment index was 52.0 for last month; it was 51.7 in September. The inventories index stood at 47.2, after 41.6 the prior month.

Linda Piazza : 11/1/2007 10:27:34 AM

At 1523.78, the SPX has bounced back to its 10-sma. What's happening, then, is that it's struggling to maintain the support of that 10-sma. It's possible that resistance seen now on the 15-minute chart at 1527.16 on 15-minute closes and especially at 1532.77 on 15-minute closes will stop further bounce attempts, but that remains to be seen. Obviously bears want that resistance to hold and the downside target to be maintained.

Jeff Bailey : 11/1/2007 10:23:40 AM

Chrysler Says It Plans To Cut Up To 12,000 Jobs

DJ- Chrysler LLC Thursday said it plans to cut up to 12,000 jobs as part of an effort to slash costs and match slowing demand for some vehicles.

The automaker will cut 8,500 to 10,000 hourly jobs through 2008 and salaried employment by about 2,100. It will eliminate shifts at five North American assembly plants and eliminate four products from its line-up.

Jane Fox : 11/1/2007 10:20:25 AM

WASHINGTON (MarketWatch) - The U.S. manufacturing sector was barely growing in October, burdened by the slowdown in housing and credit, according to the Institute for Supply Management index released Thursday.

The ISM index fell to 50.9% from 52% in September, weaker than the 51.5% expected by economists surveyed by MarketWatch.

Nine of 18 industries were growing in October. Readings over 50% indicate most firms were growing. The ISM surveys corporate purchasing managers for their up-to-the-minute take on business conditions at their firms.

Linda Piazza : 11/1/2007 10:19:39 AM

The Fed has announced two other repos in addition to the one announced earlier. These are big ones, at $21.000 and $12.000 billion. Since $42.500 billion matured today, though, together with the earlier $8.000 billion repo, that still leaes a net drain of $1.500 billion so far.

Keene Little : 11/1/2007 10:18:06 AM

One way to help determine which low could be the last is to keep checking for bullish divergences against the previous low.

Keene Little : 11/1/2007 10:18:59 AM

That little consolidation before this new low was a bit short in time but it's possible we're now completing a 5-wave move down from yesterday's high which would set up a big bounce. If short I would lower my stop to the bounce highs and chase this lower but stop out if a new bounce high is made (breaking this morning's sharp downtrend line). The risk is getting whipsawed out of your short and turn right back down but that's life in the fast lane.

Linda Piazza : 11/1/2007 10:16:52 AM

Fifteen-minute RSI has now dipped below 30, a warning sign that bears should be particularly careful. RSI can absolutely trend near or below 30 on the 15-minute chart while prices keep dropping, so this isn't proof of a bounce, but rather just a heads-up to exercise good account management.

Linda Piazza : 11/1/2007 10:12:12 AM

So far, the SPX maintains its downside target, now at 1510.09. The OEX's is now 706.39. Be sure to keep lowering those stops since these targets are potential targets only.

Jeff Bailey : 11/1/2007 10:08:45 AM

This may be it Jane ... Citigroup may be forced to cut dividend: analyst ... MarketWatch Story Link

Jane Fox : 11/1/2007 10:04:17 AM

No reaction from the market on the lower than expected ISM.

Jane Fox : 11/1/2007 10:02:56 AM

U.S. Oct. ISM index 50.9% vs. 51.5% expected

Jeff Bailey : 11/1/2007 10:01:55 AM

Citigroup (C) $38.26 -7.49% ... exceeding that "bad tick" of $40.01 and then some.

Jane Fox : 11/1/2007 9:59:42 AM

Oh my goodness gracious AD line is now -2255.

Keene Little : 11/1/2007 9:59:31 AM

Looking at the 5-min chart pattern for SPX, after dropping from yesterday afternoon's high it got a little bounce into the close (lower high). If that was a 1-2 wave count then this morning's drop is wave-3. So a small consolidation (at least 30 minutes) near the low (wave-4) followed by a new low would give us a 5-wave decline. At that point it would get a little dangerous for bears and I would definitely recommend exiting any short positions.

As we've seen so many times before, this sharp move down this morning could actually be the completion of wave-C of a larger A-B-C correction from Monday's high. That would mean another rally leg up to a new high. That's the risk if you're short. That possibility can't be discarded until we get the 5-wave move down followed by a correction of it and then drop to a new low (shown in dark red on the chart). The bullish count (green) calls for a continuation higher. Continue to trade this very short term and take profits when offered. Link

Jane Fox : 11/1/2007 9:53:13 AM

I still think Crude could retest $85.00/bl and if it does I will be watching my jtHMA charts for a "buy the dip" setup. Link

Linda Piazza : 11/1/2007 9:53:12 AM

I noticed the mention of trading curbs on CNBC. If you didn't read Keene's Tuesday Wrap when he substituted for Jim, you might go back and read it, because he detailed a change in trading curbs that could be detrimental.

Jane Fox : 11/1/2007 9:49:16 AM

Internals and price action are all in sync so this is not a time to try a long position. Don't be brave and try to pick a bottom especially with the 10:00 report out.

Linda Piazza : 11/1/2007 9:49:06 AM

Tentative targets of 1510.31 set on the SPX and 706.49 on the OEX. If you're in a short-term bearish trade, a scalping or even day trade, consider what you want to do before the ISM. Lower your stop? Take partial profits?

Keene Little : 11/1/2007 9:44:06 AM

Just stay aware that the bounces could be very large. There's still a lot of money in large funds that need to exit and it's very easy for them to run the market back up, with the help of short covering, so that they can sell into it.

Linda Piazza : 11/1/2007 9:44:04 AM

Obviously, the potential SPX and OEX support has not held so far, but we haven't yet seen a 15-minute close. If those closes are beneath about 1528.73 and 715.16, respectively, those indices set downside targets near 1510.25 and 706.43, respectively, but with the ISM coming up in a few minutes, be on your toes, because a supposed target won't make any difference as people position their portfolios ahead of that number or react to it later.

Keene Little : 11/1/2007 9:41:39 AM

The DOW and SPX have now broken below yesterday afternoons lows (the key downside levels), confirming the breakdown from their parallel up-channels I showed on their 60-min charts last nigh (below). The top is in so it's time to short the bounces.

Jane Fox : 11/1/2007 9:38:25 AM

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

Linda Piazza : 11/1/2007 9:37:37 AM

Please do remember the ISM to be released at 10:00. That could change the character of the trading.

Keene Little : 11/1/2007 9:37:08 AM

The US dollar might have finally found a bottom on that news-related spike down yesterday. As seen on this daily chart of the euro it spiked up above the tops of two rising wedges and has now dropped below the the shorter term wedge (sell signal for the euro): Link . A break below 1.43 would be the next confirmation that a high is in for the euro (bottom for the dollar) and very likely highs for gold, oil and other commodities. Once price breaks below the larger wedge from August it should get retraced relatively quickly.

Linda Piazza : 11/1/2007 9:35:54 AM

The OEX is hitting first potential support at 716.79 and then 715.50 on 15-minute closes. See my 9:35:10 post about the SPX for further comments.

Linda Piazza : 11/1/2007 9:35:10 AM

Potential SPX target and support at 1533.35 on 15-minute closes, and then at 1529.79 on 15-minute closes. If that breaks, it looks much more bearish, but the triangle that set up post-FOMC, at the top of yesterday's range, has obviously now broken to the downside. Be careful of bearish gains as that first downside support is approached. Short-term bulls, if there's a bounce from that support, watch the internals carefully, because you may be being given a chance to exit at less of a loss. It will be tough to decide, so watch those internals closely.

Jane Fox : 11/1/2007 9:32:56 AM

AD line is a bearish -925.

Linda Piazza : 11/1/2007 9:32:41 AM

The Fed has already announced a repo of $8.000 billion, but it has $42.500 billion maturing today. That still leaves a $34.500 billion net drain. I expect further repos later.

Jane Fox : 11/1/2007 9:26:26 AM

WASHINGTON (MarketWatch) - The third quarter ended on a down beat, with real disposable incomes and consumer spending slowing to the weakest growth since spring, the Commerce Department reported Thursday.

The report fleshes out monthly details hidden in the quarterly data released Wednesday, which showed the economy growing at a 3.9% annual pace in the third quarter, the fastest in six months.

The September data show consumers' incomes and their spending slowed in September. In current dollars, incomes rose 0.4%, while spending increased 0.3%, in line with expectations on Wall Street.

After adjusting for inflation, after-tax incomes rose 0.2% in September and real spending increased 0.1%.

Keene Little : 11/1/2007 9:25:12 AM

Seeing equity futures down this much this morning has manipulation written all over yesterday afternoon's rally. Some big players used that golden opportunity to unload some inventory.

Jane Fox : 11/1/2007 9:19:43 AM

Overnight Crude did indeed break through $96.00/bl (96.21) and Gold topped $800/oz. (802.50) so these two may be starting to take its toll on the stock market. Notice the US$'s rally. I am thinking the US$ is in the process of making a bottom, based on the daily charts, and that of course has serious consequences on my long Gold position. Link

Jane Fox : 11/1/2007 9:15:52 AM

Here is the sour turn and I do admit it is a sour turn. Link

Jane Fox : 11/1/2007 9:14:26 AM

Marketwatch's headline this morning is "Euphoria taking a sour turn" and the article goes on to say "Bears send bulls packing because of Crude and Gold" Gee I wonder why now and not yesterday, the day before or the day Crude broke $90. Why are the bears taking control now that Crude tops $96.00?

Jane Fox : 11/1/2007 9:10:38 AM

WASHINGTON (MarketWatch) -- First-time claims for state unemployment benefits dropped to their lowest level in three weeks during the week ending Oct. 27, while the number of workers continuing to claim unemployment benefits rose to its highest level since Sept. 1, the Labor Department reported Thursday. Initial jobless claims fell to 327,000, a decrease of 6,000, the government data show. It's the lowest since Oct. 6. Continuing claims for unemployment benefits rose by 65,000 to 2.58 million. The four-week average of those claims also shot up by 13,000, to 2.53 million.

Jeff Bailey : 11/1/2007 3:30:40 AM

China Hikes Fuel Prices Amid Shortages ... AP Story Link

Market Monitor Archives