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Jeff Bailey : 11/2/2007 11:04:50 PM

Continuous Unleaded Vs. Continuous Oil $0.45 box Link ... Back at historical lows in the "crack spread." I chose a $0.45 box to try and make the chart give a buy signal. Something it hasn't been able to do since late May (34.65).

See 5/31 and 8/01 MM regarding ZPY-XN.

Jeff Bailey : 11/2/2007 10:22:47 PM

Daylight Saving Time Ends ... this weekend! (Arizona and province of Saskatchewan excluded)

For those observing, don't forget to set your clocks BACK one (1) hour before you go to bed Saturday evening, or very early Sunday morning .

Jeff Bailey : 11/2/2007 10:14:37 PM

December Copper (hg07z) settled down $0.0375 at $3.325. Session low was $3.3045.

Chart O's to $3.32 and stop. Link

OI Technical Staff : 11/2/2007 10:00:00 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The Market Monitor has been archived.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 : 11/2/2007 9:40:51 PM

Closing U.S. Market Watch found at this Link

OI Technical Staff : 11/2/2007 9:00:02 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The Market Monitor has been archived.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 : 11/2/2007 5:12:21 PM

YM ... 13,647

AIG $61.41

Jeff Bailey : 11/2/2007 5:10:20 PM

Greenburge 13D filing (update) ... Briefing.com - In the filing, Greenburg states they are "considering and evaluating strategic alternatives designed to lead to the maximization of their investment in the Issuer. The Reporting Persons believe that there are opportunities to significantly improve the Issuer's performance and strategic direction, as well as the value of their investment. In this connection, the Reporting Persons anticipate holding discussions with stockholders and third parties that may address a number of issues, including without limitation, their respective views on the Issuer's business and prospects, the suggested disposition of certain of its operations, investment opportunities and concerns over the direction and management of the Issuer generally, and other opportunities to improve or realize on the value of their investment in the Issuer. At this time, the Reporting Persons have not made any decisions regarding their future intentions with regards to their plans and proposals with respect to the Issuer."

Jeff Bailey : 11/2/2007 5:08:20 PM

American Intl. Group (AIG) $59.12 -0.28% ... edges higher at $60.80 ... Maurice Greenburg files 13D.

Keene Little : 11/2/2007 5:03:43 PM

The move down from Wednesday for the DOW and SPX would also look best with a minor new low before setting up the next larger bounce (or more). It could be a good shake-out-the-longs move on Monday and suck in a few more shorts before the buy programs hit. We'll find out soon enough. Hope everyone has a great weekend.

Keene Little : 11/2/2007 4:58:01 PM

I had mentioned earlier today (11:40 AM), with a chart of the banks (BIX), that the banks should be nearing the point where they'll get at least a bigger bounce (due to the completion, or near completion, of a 5-wave move down from the Sept high). It would look better with another day of consolidation before the banks make another minor new low to finish off the 5th wave down but as I had mentioned, the risk is now on the bears' side when I look at the banks' chart. Link

If the banks are able to muster up enough buyers (or short covering) to rally the index back up for a retest of its broken uptrend line from October 2002 (which hasn't been retested yet) that could create some bullish enthusiasm in the general market for the stronger rally back up.

Now that I've just about talked myself into the possibility for a new market high, prepare to crash next week (wink).

Jeff Bailey : 11/2/2007 4:50:19 PM

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

Closed out 1/4, or 670 shares of Coeur D' Alene Mines (CDE) at $3.91.

Raised stop and target on the remaining 1/4 position to $3.70 and $4.14 respectively.

Jeff Bailey : 11/2/2007 4:37:33 PM

US Fed Says KeyCorp Can Merge With USB Holding

DJ- The Federal Reserve said Friday that KeyCorp (KEY), based in Cleveland, can acquire U.S.B. Holding Co. (UBH), of Orangeburg, N.Y.

The Fed announced its approval of the merger of the bank holding companies.

By acquiring U.S.B., KeyCorp indirectly acquires its subsidiary, Union State Bank in Nanuet, N.Y.

KeyCorp has total consolidated assets of about $93.5 billion and is the 24th largest depository organization in the U.S.

Jeff Bailey : 11/2/2007 4:29:14 PM

Wow! What a day for traders. I sure could have done without the YM having traded 13,556 though.

Jeff Bailey : 11/2/2007 4:23:31 PM

S&P 500 (SPX.X) 1,509.65 +0.08% Link ... Today's trade at 1,500 has "O getting the square." Stop charting there.

Triangle would establish on SPX 3-box reversal back up to 1,530.

Keene Little : 11/2/2007 4:16:36 PM

One last point about the possibility for one last rally leg is the P&F chart that Jeff posted earlier (12:17). It's very common for a 4th wave to form a sideways triangle as it points to the last move of the rally that will be next. On that P&F chart a tag of 1560 would be a buy signal and it would of course negate the bearish wave count in the process.

I have no idea if this will come to pass but it does tell me the bulls are certainly not dead yet. They were wounded this week, and next week could be the final thrust of the sword from the matador ("dark day" run down on Wed./Thurs.), but until that happens the bears need to be acutely aware of the possibility for yet another new market high (and last).

Jeff Bailey : 11/2/2007 4:15:20 PM

Swing trade long adjust stop/target alert! for the remaining 1/4 position in shares of Coeur D' Alene Mines (CDE) $3.93 +2.07% ...

Raise stop to $3.70. Raise target to $4.14.

Jane Fox : 11/2/2007 4:05:39 PM

Economic reports out tomorrow include:

10:00a.m. Oct ISM Non-Manufacturing Business Index. Previous: 54.8.

Jane Fox : 11/2/2007 4:05:07 PM

Dateline WSJ - Citigroup board members are expected to gather for an emergency meeting this weekend.

Keene Little : 11/2/2007 4:01:25 PM

Another reason I'm taking seriously the possibility we're going to rally to a new high here is based on fractal patterns. I've got the July-Aug decline labeled as green wave-(4) and the possibility is that the October decline is one smaller degree green wave-4. See the fractal pattern (similarity) between them? That's what points to the possibility that the bulls are going to pull another (and would be their last) rabbit out of the hat here.

Jeff Bailey : 11/2/2007 3:59:16 PM

1/2 position = $5000.00

CDE was trading $3.73 at time of entry.

So ... $5,000.00 / $3.73 = 1,340 share.

Selling half of that is 670 shares.

It's just that easy.

Jeff Bailey : 11/2/2007 3:55:18 PM

Swing trade long sell partial alert! ... Please place an order to sell 670 shares of the Coeur D' Alene Mines (CDE) at the bid of $3.91. Hold the rest!

Keene Little : 11/2/2007 3:50:38 PM

This is a very interesting setup on the SPX daily chart. Today's candle is a bullish hammer at support. It needs a green day on Monday to confirm it but this is reliable signal. The question from here is whether or not we'll get the next rally leg up (in green). Link

Keene Little : 11/2/2007 3:42:20 PM

Jane, I had to laugh at your post on the US dollar MACD divergence. It's one of those sardonic laughs similar to Marks blah, blah, blah comment about divergences that would go on and on and ... I've been watching the bullish divergence in the dollar and bearish divergence on gold for a long time and it hasn't meant a hill of beans to which way each continues to trade. Just goes to show it offers a heads up but not a very good timing tool.

And speaking of gold it could still head higher now that it has busted through 800. This weekly chart shows how price has rallied up to, and through, the top of a parallel up-channel from 2006, with bearish divergences, and could leave a throw-over if it drops back below 800: Link

While that would look bearish, especially if MACD turns back down from that bearish divergence, the price pattern doesn't turn bearish now until it drops back below 749 with a heads up at 780 that a top may have been found. In the meantime I now see upside potential to at least 830.

Jeff Bailey : 11/2/2007 3:37:38 PM

Swing trade call option alert! ... for one (1) of the China Telecom CHA Dec. $100 Calls (CHA-LT) at the offer of $2.85. No stop for now, target $110.

CHA $80.52 -2.22% ...

Jane Fox : 11/2/2007 3:28:06 PM

There is a huge MACD divergence forming on this daily chart of the US$. Link

Jeff Bailey : 11/2/2007 3:13:24 PM

CA JUMPS WITH 2Q NET, OUTLOOK

DJ- Shares gain 3% a day after CA reports its fiscal 2Q net income jumped to $137 million, or 26" a share, helped by lower amortization of software costs. It boosts its full-year 2008 forecast to 87" to 91" a share from 75" to 81".

CA $27.00 +2.77% ... gap high was $28.11. Be careful if long. Might be a "sell the news."

Jeff Bailey : 11/2/2007 3:10:47 PM

FED OKS REFORM TO BANK CAPITAL STANDARDS

DJ- Federal Reserve Board votes to approve new capital standards for large U.S. banks, a significant procedural step in the eight-year international effort to modernize bank risk management, known as Basel II.

Jeff Bailey : 11/2/2007 3:10:00 PM

INTERNATIONAL PAPER 3Q NET DOWN 3.1%

DJ- Paper company earns $217 million, or 51" a share, after a year-earlier gain on forestland sales. Excluding items, International Paper earns 57" a share. Revenue rises 2.1% to $5.54 billion.

IP $35.23 -2.32% ...

Jeff Bailey : 11/2/2007 3:08:39 PM

EUROPEAN SHARES FALL AS BANKS SLIDE

DJ- European stocks fall for a second successive day as fears over financial stocks' exposure to credit market losses continue to batter the beleaguered banking sector. London ends down 0.7% with Barclays down 6%.

BCS $44.60 -5.56% ...

Jeff Bailey : 11/2/2007 3:06:56 PM

CHEVRON NET FALLS 24% ON LOWER MARGINS

DJ- Oil company's earnings slide to $3.72 billion, or $1.75 a share, hurt in part by about $400 million in charges from nonrecurring items and weak refining margins and lower output. Revenue rises 1.8% to $55.17 billion.

CVX $88.00 -1.16% ...

Jeff Bailey : 11/2/2007 3:04:23 PM

BOND INSURERS SINK AGAIN AS CREDIT WORRIES CONTINUE

DJ- Shares of bond insurers continue to drop on worries about whether they may have to take losses to cover rising defaults in the mortgage-backed securities they guarantee. MBIA is at its lowest point since March 2003 and Ambac is at a 10-year low.

Jeff Bailey : 11/2/2007 3:03:15 PM

MERRILL SHARES SINK ON CREDIT WORRIES, PROBE REPORT

DJ- Shares of Merrill Lynch drop 10% on fears that the company's already deep mortgage losses are worsening and a Wall Street Journal report that says it has engaged in deals with hedge funds that may have been designed to delay recognition of losses. Merrill says it doesn't believe such deals occurred. Merrill wrote down $7.9 billion of mortgage securities and collateralized debt obligations last quarter.

MER $55.85 -10.22% ...

Jeff Bailey : 11/2/2007 3:01:29 PM

Arizona Nuclear Plant (update)

DJ- Security officials at the nation's largest nuclear power plant detained a contract worker with a small explosive device in the back of his pickup truck Friday, authorities said.

The worker was stopped and detained at the entrance of the Palo Verde Nuclear Generating Station, said U.S. Nuclear Regulatory Commission spokesman Victor Dricks. Security officials then put the nuclear station on lockdown, prohibiting anyone from entering or leaving the facility.

Authorities described the device as a small capped pipe that contained suspicious residue.

Capt. Paul Chagolla with the Maricopa County Sheriff's Office said sheriff's officials have rendered the device safe and that investigators were interviewing the worker.

The plant was operating normally and there was no threat to the public, Palo Verde spokesman Jim McDonald said.

Jeff Bailey : 11/2/2007 2:58:50 PM

Arizona Nuclear Plan Security Stops Worker With Explosive Device

Jeff Bailey : 11/2/2007 2:58:09 PM

DJ- Nymex Crude Settles At Record $95.93

Keene Little : 11/2/2007 2:52:33 PM

At this point the market looks more like it's settling lower due to a buyer bycott more than anything else. We could go out near the lows if it just keeps settling lower in which case keep an eye on SPX 1490 if it does. That would set up a rally on Monday.

Interesting reading the "dark days" paper because a hard selloff like that sounds like a 3rd wave kind of move. As I've labeled on my charts, the move down from this past Wednesday is wave-1 and a bounce into a Tuesday high would be wave-2 which would set up a wave-3 to the downside next Wednesday/Thursday. Does make me wonder.

Jeff Bailey : 11/2/2007 2:50:10 PM

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

Jane Fox : 11/2/2007 2:47:34 PM

You would of course expect the AD volume ratio and absolute to be in sync although many times they are not, as I have mentioned ad nauseam, but I find it very interesting how the VIX not only mirrors S&P futures but the AD volume as well. Link

Keene Little : 11/2/2007 2:39:29 PM

Here's the link to the DOW paper on "dark days": https://www.mta.org/eweb/docs/1998DowAward.pdf

Jane Fox : 11/2/2007 2:39:22 PM

Gold has hit $811/oz today.

Jeff Bailey : 11/2/2007 2:34:36 PM

Bullish swing trade long raise stop alert! ... for the 1/4 position in the US Oil Fund (USO) $74.28 +2.92% ... to $71.00.

$0.50 box chart to match futures Link

Try and protect against a sell signal.

My $77.50 target is tied to $100 oil in Nymex futures.

Still some room to bullish vertical count(s) in USO and Dec/Jan Crude Oil.

Keene Little : 11/2/2007 2:31:05 PM

On the "dark days" question, this from Al (thanks Al, and Mike who sent me the pdf file on the paper as well):

This from David Nichols Fractal Market Report:

"We also have to consider that this selling pressure is flooding in as the "dark days" are fast approaching on November 7th and 8th, next Wednesday and Thursday. According to a Charles Dow Award-winning paper from 1998, many of the largest financial panics in history have occurred on the same two days on the annual lunar calendar, and this year those dates are coming up next week."

The paper also discusses the large rebound effect on the third day -- which would be Friday in this case -- and how a large chunk of the panicky declines are recovered on that day.

I am fully aware how wacky this sounds, but every single day I observe things in the markets that can't be explained in a rational, logical way. We are not even close to having all the answers when it comes to understanding the natural world, including markets.

One thing that particularly intrigued me about this paper -- and made me take the idea much more seriously -- was how way back in 1857 there were severe market declines taking place on different continents right on the "dark days", even though there was no real-time communication.

Jane Fox : 11/2/2007 2:30:40 PM

As I have stated many times, I follow Bob Brinker's Markettimer. Brinker has been one of the top market timers for over 5 years according to Hulbert Financial Digest. Here is part of his latest newsletter, "We expect the stock market to set a series of new record highs into next year as investors discount growing corporate earnings against a backdrop of slow economic growth, low inflation, and low interest rates. While it is unfortunate that some will lose their homes due to the irresponsible borrowing and lending practices that lead to the sub prime mortgage debacle, the silver lining is that the housing recession has eliminated any risk of overheating the economy in 2008.

Jeff Bailey : 11/2/2007 2:25:29 PM

Citigroup (C) $37.06 -3.76% ... nearing its PnF charts bearish vertical count ($36).

Jeff Bailey : 11/2/2007 2:23:59 PM

Select Financial SPDRs (XLF) $31.35 -2.03% ...

Jeff Bailey : 11/2/2007 2:23:14 PM

HSBC Holdings (HBC) $94.27 -1.30% ... after backfilling this morning's gap.

Jane Fox : 11/2/2007 2:12:29 PM

I will not short Crude until I get a confirmation this little puppy is good and ready to take a rest and so far it has not shown me it is ready for that rest. Link

Jane Fox : 11/2/2007 2:07:36 PM

Oh my goodness gracious Gold is having a very very good day today. Link

Keene Little : 11/2/2007 2:03:34 PM

Have you heard or read anything about these supposed "dark days" that are due next week on the 7th and 8th?

That's a new one that I haven't heard. I'm posting the question to see if anyone else has heard of this and you can email me.

Jeff Bailey : 11/2/2007 1:58:24 PM

Countrywide (CFC) $14.53 +0.69% ...

Jeff Bailey : 11/2/2007 1:53:50 PM

YM 13,582 ... may have had stop at incorrect level. Afternoon low now 13,553. 38.2% dynamic 13,551. 50% 13,577.

Jeff Bailey : 11/2/2007 1:49:08 PM

Coeur D' Alene (CDE) $3.79 -1.55% ... moves aggressively into morning gap.

Jeff Bailey : 11/2/2007 1:47:40 PM

NYSE Adavance just went 1,499 advancers to 1,369.

Jeff Bailey : 11/2/2007 1:46:32 PM

Not bullish after YM fell below WEEKLY S1, then on "bounce" back to it, found sellers.

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

YM Long stopped alert! at 13,556.

Keene Little : 11/2/2007 1:33:45 PM

Stepping away for about 30.

Jane Fox : 11/2/2007 1:28:06 PM

That was a very nice bounce off daily lows and has turned the daily candles into bullish dojis. The bulls now have to keep the bears at bay so we can have a bullish week next week.

I was surmising earlier that I thought we may just lollygag around and not make new yearly highs until next year and the price action these last few days has added to that contention. Link

Jeff Bailey : 11/2/2007 1:16:05 PM

YM 13,590 ... back to test WEEKLY S1.

Keene Little : 11/2/2007 1:15:16 PM

Here's what I was looking at on the YM 1-min chart for the A-B-C count where wave-C = 162% of wave-A at 13625, tagged on the nose. Link

Keene Little : 11/2/2007 1:12:52 PM

Sorry Jeff, didn't see your trade post until after I posted. Good luck with that trade.

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

It's possible this current leg up could be completing wave-c of an a-b-c bounce off this morning's low (for the 4th wave). If true then this is going to turn right back around and head for a new low now. Be careful here if in a long position.

Jeff Bailey : 11/2/2007 1:06:32 PM

YM long stop/target ... stop goes 13,556. Target 13,690.

Jeff Bailey : 11/2/2007 1:04:35 PM

YM long alert! ... here at 13,620.

Keene Little : 11/2/2007 1:01:35 PM

Does the EW pattern look we will test the 1490 mark or has it come close enough?

That's exactly what I'm wondering here as we get a bigger bounce. Ideally this bounce is part of a larger 4th wave. The 2nd wave in the move down from Wednesday's high should be the bounce yesterday morning so the 4th wave should take at least as long as that 2nd wave. A consolidation here should then give us the 5th wave down to the 1490 area.

However, any rally back above 1520 would negate that expectation potentially leaving just a 3-wave decline which would further support the bullish possibilities (as just posted on the daily chart). This bounce is already looking stronger than a 4th wave, especially on the techs, so if short don't let this go much more against your position.

Keene Little : 11/2/2007 12:46:25 PM

I've been trying to get a feel for what bonds are doing and it's interesting that I'm getting a bullish feeling about yields here. The bullish divergences as TNX tests its previous low near 4.3% gives me the impression the low is going to hold. A rally in TNX could take it back up to test its October high as part of a larger consolidation pattern (or even rally higher): Link

This muddies the waters a bit when it comes to what the stock market could do if SPX 1490 continues to hold. While TNX didn't rally nearly as hard as the stock market into the October high, yields and stocks have been mimicking each other in direction. So if TNX is going to get a bigger bounce will the stock market also?

And if it does, could SPX rally to a new high as per the bullish price projection on its daily chart (target just above 1600): Link ? The bulls clearly have some work to do to get this turned around but never underestimate their ability to do it--we've seen these sharp selloffs get reversed back to new highs how many times this year?

Notice too that SPX has been finding support not just at 1490 (previous support/resistance since May) but also at the mid line of its long term up-channel from 2003. Don't lock yourself into a long term bet and let this market get away from you. Both sides need to be very careful here.

Jeff Bailey : 11/2/2007 12:39:18 PM

Swing trade long alert! ... for 1/2 position in shares of Coeur D' Alene Mines (CDE) at the offer of $3.73 -3.11%. Stop goes $3.63. Target $4.05.

Jane Fox : 11/2/2007 12:34:26 PM

If you did not get long the SPX on Oct 22nd or Oct 24th you have another chance today. This is a perfect setup with your stop so very very clear. You don't see setups like this often so I would be taking advantage of it. Link

Jeff Bailey : 11/2/2007 12:28:00 PM

EUR/USD 1.44875 x 1.44895 +0.44%

Jeff Bailey : 11/2/2007 12:25:48 PM

ProShares UltraShort Oil & Gas (DUG) $40.63 -0.34% ...

Jeff Bailey : 11/2/2007 12:24:42 PM

Swing trade long alert! ... for 1/4 position in the US Oil Fund (USO) $73.63 +2.02% here. Stop goes $70.75. Target $77.50

Jeff Bailey : 11/2/2007 12:17:58 PM

If short copper from Tuesday's MM news, would look to lock in gains.

Jeff Bailey : 11/2/2007 12:15:46 PM

Freeport McMoran (FCX) $111.82 -0.20% ... held 19.1% retracement $110.05 (8/16 low to recent 10/11 high)

Jeff Bailey : 11/2/2007 12:14:39 PM

December Copper (hg07z) $3.30 ... nearing bullish support trend.

Keene Little : 11/2/2007 12:04:34 PM

When I say accurate what I mean is that the put/call data that ISE uses seems to be more reflective of trader sentiment and using that sentiment data from a contrarian perspective (which is the way it's meant to be used) appears to be more accurate with their data than other put/call data. For those who missed my report on this, they track opening trades only (long puts and calls that are opened) and they feel this eliminates a lot of large firms' trades that use options more for hedging which are not necessarily reflective of trader sentiment.

Keene Little : 11/2/2007 11:58:14 AM

McMillan's discussion about the put/call ratio reminded me of the ISEE Index chart that I showed in Tuesday's Wrap ( Link ). I had mentioned that previous market peaks were within days of those high readings noted of on the chart). The high reading on Tuesday the 30th was followed by a market peak the next day. For me this ISEE index is more accurate than many of the other put/call ratios that are followed. You can find it at: Link

Jane Fox : 11/2/2007 11:45:43 AM

Here's the SPX 1490. Link

Jane Fox : 11/2/2007 11:44:51 AM

McMillan's weekly commentary - The $SPX chart continues to show support at 1490. Admittedly, that support seemed a long ways away after Wednesday's close near 1550, but after Thursday's big decline, that support level is once again within sight. If $SPX closes below 1490, it would a cause for concern, but on a more positive note, as long as it continues to close above there, the chart is bullish.

A week ago, the equity-only put-call ratios were on the verge of sell signals, but that has changed. The weighted ratio dropped to new lows this week (see Figure 3). The canceled any pending sell signals, but does leave the ratio in an overbought condition. The standard ratio has not accompanied the weighted ratio to new lows (Figure 2), but it has rolled over and started to trend lower again. That also cancels its sell signal of last week.

Market breadth had been working its way into positive territory through Wednesday, but Thursday's large decline has resulted in both breadth once again registering sell signals.

Volatility indices ($VIX and $VXO) had seemingly been in a bullish downtrend, since peaking near 24 a couple of weeks ago. Wednesday's $VIX close below 19 was also below the 20-day moving average. The bullishness of that data was wiped out by a huge rise on $VIX on Thursday. Once again, $VIX rose to 24. It would be negative if it closes above that level, but as long as it stays within the recent 18-24 range, it can be considered neutral at least.

Even so, higher prices seem possible as long as $SPX holds above support at 1490.

Keene Little : 11/2/2007 11:40:04 AM

The banks have been one of the leading sectors to the downside but could be nearing a point where they'll give us a bigger bounce soon. The current leg down fits well as a 5th wave in the move down from the September high. It would look best with a small consolidation and minor new low after that but I think it's getting close: Link . From a trading perspective, chasing bank stocks to the downside now is probably a riskier trade than going after some of the other sectors that are just now starting to break down.

Jeff Bailey : 11/2/2007 11:34:54 AM

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

Closed out the FCX-XC.

Established/adjusted stops for MFE-MH and HBC-WT.

Keene Little : 11/2/2007 11:22:21 AM

Price action continues to fit as a small 4th wave correction here so another drop is expected and a test of SPX 1490 should be next.

Jeff Bailey : 11/2/2007 11:20:02 AM

Swing trade put establish stop alert! ... for the one (1) McAfee MFE Jan $40 Put (MFE-MH) at $41.20.

MFE $40.26 -1.22% ...

MFE-MH are currently $2.55 x $2.65.

Jeff Bailey : 11/2/2007 11:00:14 AM

VIX.X 24.25 +4.48% ...

Jeff Bailey : 11/2/2007 10:59:52 AM

Swing trade put lower stop alert! ... for the one (1) HSBC Holdings HBC Nov. $100 Put (HBC-WT) to $97.10 in the underlying.

HBC $94.20 -1.38% ...

HBC-WT are currently $6.20 x $6.50.

Keene Little : 11/2/2007 10:42:34 AM

I'm watching the current bounce to see if it forms a little sideways/up consolidation over the next few hours which would set up another drop that would likely take SPX down for another test of 1490. Then a bounce before that support level breaks. That's speculation at this point but the pattern might look something like on this 60-min chart showing a downside objective in the 1470 area before a bigger correction: Link

Jeff Bailey : 11/2/2007 10:36:21 AM

If I were an option trader (and I am) that had a handfull of the HSBC Holdings (HBC) $94.20 -1.38% puts, I'd take 1/2 of them off the table. If I were still holding short a full position (and I am), I'd moved down a stop on a portion of the position to $94.35.

Jane Fox : 11/2/2007 10:20:54 AM

Have a good trip Linda.

Linda Piazza : 11/2/2007 10:20:35 AM

I'm shutting down the computer now. The SPX's 30-minute 9-ema is now at 1512.67 and descending quickly. The OEX's version is 706.93 and descending quickly. This is the average that stopped both indices yesterday.

If yesterday's consolidation occurred about midway through the drop, as sometimes happens, then a snapped Fib bracket tells us that it's about time for a bounce, so be cautious with your bearish profits and determine, right now, whether you want to weather a bounce back up to the 30-minute 9-ema before you even know if it will hold. Perhaps, if you're in a short-term play, you'd rather be following more closely with your stops. If you intended this as a longer-term play and have bigger profits under your belt, perhaps you want to weather that test. Your choice. Just, absolutely, do not let a profit turn into a loss. Relief rallies can be brutal.

Jeff Bailey : 11/2/2007 10:19:24 AM

Freeport McMoran (FCX) $110.22 -1.62% ...

Jeff Bailey : 11/2/2007 10:18:47 AM

Dollar too weak.

Jeff Bailey : 11/2/2007 10:18:38 AM

Swing trade put exit alert! ... for the one (1) Freeport McMoran FCX Dec $115 Put (FCX-XC) at the bid of $10.25.

Jane Fox : 11/2/2007 10:18:18 AM

Hansel better be getting ready to hold back the dike, a close below this support would not bode well for the bulls. Link

Keene Little : 11/2/2007 10:06:33 AM

I had mentioned last night that if SPX drops below 1497.55 (two equal legs down from Wednesday's high) that we'll probably see a quick test of 1490 again. It's looking like we may get that test sooner rather than later.

Linda Piazza : 11/2/2007 10:04:44 AM

Remember the possibility that an early drop might get reversed if there's to be a doji type day today. Don't know that will happen, of course, but it's a possibility after a big range day.

Keene Little : 11/2/2007 9:56:38 AM

This is the 2nd gap down day in a row for MER and it would appear it's well on its way down in a 3rd wave. It should have much lower to go (same for the banks and brokers--XBD is currently down almost -4% this morning). Link

Jane Fox : 11/2/2007 9:54:43 AM

Internals are bearish. It will be quite a coup for the bears if it is able to bring the market to its knees after the bullish employment report.

Linda Piazza : 11/2/2007 9:53:15 AM

Here's my SPX 30-minute chart and annotations from last night's Wrap: Link

Linda Piazza : 11/2/2007 9:51:58 AM

$12.000 billion in repos mature today. So far, the Fed has made an injection of $6.250 billion, leaving a net drain of $5.750 billion. A total of $41.250 billion is still sloshing through the system, but that's down from yesterday's $47.000 billion.

Keene Little : 11/2/2007 9:51:29 AM

Just noticed MER. Ouch, big gap down and running lower. Currently down -7.3%. That's not going to sit well with the market.

Jane Fox : 11/2/2007 9:46:25 AM

Markets have not yet been able to break overnight highs. Link

Linda Piazza : 11/2/2007 9:44:35 AM

After piercing the former rising trendline off its summer low yesterday and then falling back below that line, the USDJPY is now higher this morning but still below that former support. That's now at about 115.44, and the USDJPY is now at 115.14. I'm wondering, though, if this currency pair will be as predictive as both the U.S. and Japanese economies sort out what happens next. Would a rise in the USDJPY now be concerning to some who most want a rate cut? Or good news to those who engage in yen carry trades for the purpose of buying U.S. equities?

Jane Fox : 11/2/2007 9:42:38 AM

Gold is reacting to the US$ making new yearly lows. Link

Keene Little : 11/2/2007 9:41:06 AM

The market liked the unemployment data but as far as predicting future growth that's not a very good indicator as employment data is a lagging indicator. Plus the birth/death model that the Dept. of Labor uses tends to be wrong at times when the economy is transitioning from one phase to another (tends to "create" too many jobs when the economy is slowing and not enough jobs when the economy is growing).

The US dollar had a big spike down and then back up on the news and now back down again. Bonds are doing the same and now equities are pulling back. There's a lot of nervousness out there right now and traders all around aren't quite sure what's going on.

Linda Piazza : 11/2/2007 9:39:48 AM

I'll be leaving in a few minutes to go out of town. Before I do, I wanted to remind subscribers that an often-seen pattern after such a big-range day is to see a choppy bull vs. bear battle day. That's not always true, of course, and the RUT in particular sometimes sees big reverses of down days the next trading day. Still, I wanted to remind you to exercise caution when making trading decisions today.

Jane Fox : 11/2/2007 9:35:53 AM

VIX making new daily highs supporting the new daily lows in the S$P futures.

Jane Fox : 11/2/2007 9:35:12 AM

AD line now +1074.

Jane Fox : 11/2/2007 9:32:48 AM

AD line is bullish but not overly so at +663.

Jane Fox : 11/2/2007 9:32:07 AM

The poor US$ gets no love, although I do see a bottom forming. The trick is trying to figure out where exactly that bottom is. Link

Keene Little : 11/2/2007 9:30:28 AM

We've got a bullish start to the morning which will hopefully provide some more clues as to whether we'll get something more than just a corrective bounce.

Jane Fox : 11/2/2007 9:29:40 AM

US$ took a huge jump upwards but is now making new overnight lows (based on a 9:30 open). This is giving Gold a nice little prod and it is back retesting $800.00 as I type, remember my Gold charts are on a 20 minute delay.

Crude is hovering around $94.00 up from yesterday's low at $92.06. Link

Jane Fox : 11/2/2007 9:10:06 AM

Needlesss to say the overnight futures markets really liked the employment data out at 8:30 and are recovering a little of what they lost yesterday although they have a long ways to go to recover it all. Link

Jane Fox : 11/2/2007 9:02:57 AM

Dateline WSJ - WASHINGTON -- U.S. employment soared at its fastest pace in five months in October led by strong gains in services, easing concerns about the state of the economy and suggesting further Federal Reserve rate cuts are highly unlikely in the near term.

Nonfarm payrolls rose 166,000 in October, the Labor Department said Friday, up from September's 96,000 gain, which was revised down by 14,000. August payrolls were revised up to a 93,000 gain from 89,000. The unemployment rate was unchanged last month at 4.7%.

Despite the larger-than-expected payroll rise, inflationary pressures appeared well contained. Average hourly earnings increased $0.03, or 0.2%, to $17.58. That was up just 3.8% from a year earlier, suggesting relatively tight labor markets are not putting much pressure on labor costs.

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