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Keene Little : 11/8/2007 1:14:31 AM

Thursday's pivot tables: Link and Link

I've got a downside target for SPX at 1461-1467 which would likely mean a gap down and reverse hard back up. I'm not sure that would hold so the lower target around 1424 could be in play if things get ugly on Thursday.
SPX daily: Link
SPX 60-min: Link

OI Technical Staff : 11/7/2007 9:59:59 PM

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Jeff Bailey : 11/7/2007 8:20:51 PM

Remember several weaks ago when Bear Stearns "cleaned house" at its subprime desk?

They didn't manage the risk, and they're on the street.

Jeff Bailey : 11/7/2007 7:45:55 PM

When, if you listen to MS's call, when MS talks about being net short, then flat, then long CDO-related portfolio, think about your being long USO, but short the equity side of the trade in 50/50 amount.

Even though they held, and still hold subprime, they were actually net short at the beginning of the year.

As subprime weakened further, the hedge increased in value, though subprime portfolio fell.

At some point, the subprime losses were equal to the hedge.

Then as subprime losses built further, the size of the portfolio surpassed what the hedge was capable of managing.

So, as any good analyst would ask, when always measuring RISK, the analyst asks ... "What is the worse/worse case scenario?"

or ... "What is the RISK/RISK case scnario?"

Jeff Bailey : 11/7/2007 7:38:18 PM

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

Jeff Bailey : 11/7/2007 7:26:48 PM

cl07z settled down $0.33, or -0.33% at $96.37.

rb07z settled up $0.0056, or +0.23% at $2.4406.

ho07z settled up $0.0097, or +0.37% at $2.6175

ng07z settled down $0.2390, or -3.04% at $7.624. 4th-straight down day for nat gas. Last time we saw that was 09/25-9/28.

Jeff Bailey : 11/7/2007 7:19:02 PM

YM opening ... -70 at 13,285.

Jeff Bailey : 11/7/2007 7:18:16 PM

Closing U.S. Market Watch found at this Link

YM Closed 13,300. Settled 13,355.

DXY at 03:00 market was 75.412

Jeff Bailey : 11/7/2007 7:11:35 PM

MS extended T&S Link ... all retail.

Jeff Bailey : 11/7/2007 7:05:52 PM

MS Call (replay) Link

Jeff Bailey : 11/7/2007 7:04:45 PM

MS ... $52.20 last tick.

Jeff Bailey : 11/7/2007 7:04:29 PM

MS ... call ends. Sorry about call being held so late.

Jeff Bailey : 11/7/2007 7:03:11 PM

I didn't get all of MS's answer, but agreed with analysts question on how he was going about his worse/worse case.

Jeff Bailey : 11/7/2007 7:01:25 PM

Q: Trying to get a worse/worse case scenario ...

Jeff Bailey : 11/7/2007 6:59:20 PM

MS ... short position was/is proprietary ...

Jeff Bailey : 11/7/2007 6:58:54 PM

MS $52.00 ...

Jeff Bailey : 11/7/2007 6:58:38 PM

Q: Confident of hedges put in place?

A: Feel sufficient given exposure we have.

Jeff Bailey : 11/7/2007 6:57:09 PM

Q: What were balances at beginning of year?

A: Roughly $13B. Hedge was put on near end of December.

Jeff Bailey : 11/7/2007 6:55:18 PM

Q: Are implied losses given info 25%?

A: Will stick with guidance given today.

Jeff Bailey : 11/7/2007 6:54:07 PM

MS ... could see a "vulture" bid for some ABS CDOs

Jeff Bailey : 11/7/2007 6:53:40 PM

MS ... $51.97 ...

Jeff Bailey : 11/7/2007 6:52:55 PM

Q: What is sensitivity in model based on 10% increase/decrease?

A: Level of disclosure currently given is more than we would usually give.

Jeff Bailey : 11/7/2007 6:51:54 PM

Q: Great to see ABS is still hedged and working, but what do you do with hedge going forward?

B: Focusing on net exposure, don't want to get whipsawed.

Jeff Bailey : 11/7/2007 6:50:59 PM

Q: Of subprime exposure, what % is actually marked to market ...

A: Difficult to assess.

Jeff Bailey : 11/7/2007 6:49:19 PM

MS's Q&A about to begin.

Jeff Bailey : 11/7/2007 6:47:54 PM

MS went from net short, to flat to long as subprime weakened further in Q3.

Jeff Bailey : 11/7/2007 6:43:18 PM

MS went out at $51.19 -6.09% ... stock ticks $51.50 extended.

Jeff Bailey : 11/7/2007 6:42:56 PM

MS Call Begins ...

Jeff Bailey : 11/7/2007 6:42:05 PM

Morgan Stanley Sees $3.7B Write Down From Subprime Exposures

Maximum Exposure of $6B At Oct. 31.

MarketWatch Story Link

Morgan Stanley's Press Release Link

Tab Gilles : 11/7/2007 6:21:51 PM

Weekly EIA Report Link

Jeff Bailey : 11/7/2007 5:41:18 PM

WebMD Health (WBMD) $44.13 -3.89% ... ticked lower at $42.49 on headline numbers.

Jeff Bailey : 11/7/2007 5:36:51 PM

Kinross Gold (KGC) $19.96 -4.22% ... ticks $19.76 extended on headline numbers.

Keene Little : 11/7/2007 5:28:23 PM

Very ugly in the futures right now, ES is down another 15 (equivalent to another -150 on the DOW) right here.

Jeff Bailey : 11/7/2007 5:27:38 PM

ION Geophysical (IO) ... long-time subscribers know them as Input/Output, or "inny-outy" ... no change in extended on headline numbers.

Jeff Bailey : 11/7/2007 5:24:50 PM

Heelys (HLYS) $7.22 +1.12% ... slips to $6.76 extended on headline numbers.

Jeff Bailey : 11/7/2007 5:18:47 PM

Amerco (UHAL) $59.01 -6.79% ... ticked higher at $60.42 in thin, thin, thin trade on headline number.

Jeff Bailey : 11/7/2007 5:16:53 PM

American Intl. Group (AIG) $57.90 -6.68% ... marked lower at $56.25 on headline numbers.

Jeff Bailey : 11/7/2007 5:12:39 PM

Cisco Systems (CSCO) $32.75 -3.90% ... marked lower on headline numbers. $30.05 extended.

Jeff Bailey : 11/7/2007 5:12:03 PM

First Solar (FSLR)

Keene Little : 11/7/2007 4:34:22 PM

I'm sensing a definite mood swing to the negative side in this market.

Keene Little : 11/7/2007 4:33:28 PM

I was looking at the wrong closing candle--CSCO is down about 1.75 from its closing price of 32.75 and this after dropping from yesterday's 34.24 high.

Keene Little : 11/7/2007 4:30:49 PM

Looks like a little sell-the-news after CSCO's good earnings report. After diving into the close they're down another 50 cents to $31 right now. It's not having much of an impact on YM. ES and NQ about to reopen.

Jane Fox : 11/7/2007 4:19:43 PM

DAteline WSJ - Cisco's earnings rise 37% as sales reach $9.55 billion, helped by new products and emerging markets

Tab Gilles : 11/7/2007 4:00:45 PM

Good points made on Cisco, Linda.

Take a look at the market over the last 3 months...there has not been any string of declines or gains longer than 3-days in length.

This market is so hyper volatile that is is over reacting on both good and bad news. I wouldn't be surprised to see the market rally +300 points tomorrow on Cisco earnings.

Look at the new lows on the NAZ: Link

Keene Little : 11/7/2007 3:59:13 PM

There is the potential for this to gap down and run lower tomorrow morning so I would not want to be long this market right now.

Linda Piazza : 11/7/2007 3:53:19 PM

The SPX drops toward the 200-ema now.

Linda Piazza : 11/7/2007 3:50:54 PM

New low on the SPX as it tests the Keltner support and the more important 200-sma. Keep lowering your stops, especially if you intend to exit by the close today. It will soon be time to place your orders to exit if your stops haven't been hit and you intend to exit by the end of the day.

Should you exit by the end of the day? Again, that depends on whether you've been in a bearish trade since Halloween, have been stepping out of partial positions at specific increments and have an essentially free trade on your hands, or whether you've just bought NOV options at some point today and paid enough for them that you're going to be sweating bullets overnight. If I were day trading, I'd probably be exiting at least partial positions if not the whole postion if I were in a long put play with the SPX testing its 200-sma and with CSCO earnings due after the close. Your risk is that you exit ahead of another gap lower tomorrow. Your risk if you don't exit is that there's a gap higher tomorrow and a CSCO-induced rally occurs.

Jane Fox : 11/7/2007 3:48:07 PM

There is a very good chance the SPX will close below 1490 and that is going to bring out all the bears who will be rushing to get short. Not me. I am going to just step aside and watch. A close below 1490 is not bearish enough to turn me to a bear.

Keene Little : 11/7/2007 3:43:44 PM

Somebody keeps trying to jam the market back up. Gee, I wonder who that might be.

Jeff Bailey : 11/7/2007 3:43:30 PM

USO vulnerable near-term to $72.79.

Jeff Bailey : 11/7/2007 3:42:53 PM

USO $74.67 -0.88% ...

Jeff Bailey : 11/7/2007 3:42:16 PM

DUG Alert! $40.50 +3.96% ...

Jeff Bailey : 11/7/2007 3:39:36 PM

Trades WEEKLY R1.

Jeff Bailey : 11/7/2007 3:39:27 PM

VIX.X Alert! 26.04

Keene Little : 11/7/2007 3:37:59 PM

This has the potential to get ugly into the close.

Jeff Bailey : 11/7/2007 3:35:09 PM

NASDAQ NH/NL running 88:362 ... would have 5-day Ratio running 25.7%.

Jeff Bailey : 11/7/2007 3:34:35 PM

NYSE NH/NL running 107:325 ... would have 5-day Ratio at 27.4%.

Linda Piazza : 11/7/2007 3:29:37 PM

Still no new low on the SPX. Although it popped above the 15-minute 9-ema for a couple of 15-minute periods, it has not closed above the 30-minute 9-ema, now at 1494.48. It therefore maintains its new downside target at 1483.59, which of course is near the previous LOD and that 200-sma. Just keep following your plan. If you intend to be out by the end of the day, it will soon be time to start tightening those stops a bit more.

Keene Little : 11/7/2007 3:26:02 PM

So far it's looking like just another consolidation near the lows. It could bounce higher or go sideways a little longer but I see nothing bullish here. It'll probably break lower again tomorrow which makes it difficult for most people to play the short side (since you don't know how much it will bounce overnight) since gaps to the downside make it difficult to chase it lower. It's much better to try shorting a bounce, even if it takes a time or two to find the top of the bounce.

Jane Fox : 11/7/2007 3:22:36 PM

Wow we got out of that long YM just in the knick of time.

Jeff Bailey : 11/7/2007 3:16:13 PM

September Consumer Credit Increased $3.7B

Jeff Bailey : 11/7/2007 3:15:34 PM

August Consumer Credit Revised To Up $15.4B From Up $12.2B

Linda Piazza : 11/7/2007 3:07:53 PM

No new low on the SPX or OEX. There's the danger that they may be forming wider flag formations in which they'll climb. Stick to your plan whatever it was.

Linda Piazza : 11/7/2007 2:59:20 PM

The SPX managed a first 15-minute close above its 9-ema, but it couldn't manage the same on its 30-minute chart. Bears want to see a new low of the day, of course, but remember that potential 200-sma and -ema support at 1483.20 and 1476.67, respectively. I thought earlier that there could be increased volatility when the 200-sma was first tested, and we did see a little higher bounce on a Keltner basis. Without a concerted push lower, that 200-sma and -ema support may be difficult to breach on a daily close. Just keep your rest-of-the-day plan in mind as you watch.

Keene Little : 11/7/2007 2:56:35 PM

If the bounce back above SPX 1490 can't hold and then drops to a new daily low I don't think there will be many bulls willing to stick around after that.

Keene Little : 11/7/2007 2:46:04 PM

A 38% retracement of today's decline is at SPX 1498.58.

Jane Fox : 11/7/2007 2:45:44 PM

I would be taking my profit now.

Keene Little : 11/7/2007 2:41:17 PM

I'm back. I see SPX broke its downtrend line from yesterday but so far the bounce looks like just a 3-wave correction so it could tip right back over here.

Linda Piazza : 11/7/2007 2:36:16 PM

The OEX has not closed a 15-minute period above its 9-ema, which is at about 698.

Jane Fox : 11/7/2007 2:34:50 PM

Once the high at 13487 breaks put your stop to breakeven.

Jane Fox : 11/7/2007 2:34:24 PM

YM long from 13451 stop is now at 13439 - we're getting closer.

Linda Piazza : 11/7/2007 2:34:09 PM

The SPX just closed a 15-minute period above its 9-ema for the first time today. When the SPX is trending down so hard, we know that it must eventually climb to the top of its smallest channel (1499.16, currently), so this isn't a major change yet, but taken together with the TRAN beginning to find support on that 9-ema, this begs you to pay attention to profit-protecting plans.

Jeff Bailey : 11/7/2007 2:30:54 PM

USO Alert! $75.07 -0.35% ... big test for any bears.

Linda Piazza : 11/7/2007 2:26:48 PM

Minor change in trend for the TRAN: The TRAN has begun producing 15-minute closes above its 9-ema rather than below it. Remember that it was the TRAN's sinking below the previous November low that warned us that the SPX, OEX and Dow could be subject to the same kind of action. Sometimes it pays to watch the TRAN. I also mentioned, however, that the TRAN had pierced a descending price channel's lower boundary and was bouncing, and it's again bouncing back into that channel as I type. What does this mean for SPX, OEX, and Dow traders? Maybe nothing yet but it does provide a heads-up to keep your exit plan in mind just in case the TRAN bounces bigger, bringing other indices along or else just corroborating their own bounces.

Jane Fox : 11/7/2007 2:22:31 PM

Target on the YM long is 13499. This is a 48 ticks profit so once it gets to about 90%, 43 or 44 ticks I would be locking in profit or at least putting my stop to breakeven. This has been a very difficult day to trade and that should make you very cautious

Linda Piazza : 11/7/2007 2:22:27 PM

Traders should keep in mind the weird things that can happen ahead of and then after CSCO earnings. If you've been trading long, you can remember massive CSCO-induced post-report rallies and massive CSCO-induced post-report declines, too. Keep it in mind as you plan the afternoon, thinking about whether you want to hold overnight or not.

Also, as should be clear, our markets are also impacted by things that might be said or done in Asia and/or Europe overnight. Tonight, several reports appears in Japan from 6:50-7:50 EST, incluidng September's Machinery Orders, October's Money Supply and October's Bank Lending. I'm not certain how important those particular reports will be. Several reports will be seen in Germany, too, about 2:00 EST tomorrow morning. The most important development, however, may be the Bank of England and ECB Rate Decisions tomorrow morning. That, and CSCO earnings tonight after the close, have the possibility of impacting markets. Begin deciding now whether you want to hold overnight and, if not, begin planning how you'll exit.

Jane Fox : 11/7/2007 2:14:45 PM

Raising the stop on the YM long from 13451 to 13414.

Linda Piazza : 11/7/2007 2:14:28 PM

The SPX's 15-minute 9-ema is now at 1494.29. The OEX's is at 697.90.

Jeff Bailey : 11/7/2007 2:13:39 PM

Dow Transports (TRAN) 4,703 -2.40% ...

Jeff Bailey : 11/7/2007 2:11:31 PM

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

Captured at DUG $40.09 and USO $73.94. Link

Jane Fox : 11/7/2007 1:42:31 PM

Long YM at 13451.

Jeff Bailey : 11/7/2007 1:37:10 PM

It would take a NYSE Comp trade at 10,012.41 for collars to be lifted.

90-points from yesterday's close of 10,102.41. Link

Keene Little : 11/7/2007 1:35:18 PM

Be back in about an hour.

Jane Fox : 11/7/2007 1:34:18 PM

I see a YM long at 13451 with a stop just below daily lows and target 13499.

Linda Piazza : 11/7/2007 1:32:37 PM

OEX target and potential support on 30-minute closes is at 693.73. A closer-in look says that the OEX won't have even begun to change its short-term tenor until it produces 15-minute closes above the 9-ema at 698.41.

Jeff Bailey : 11/7/2007 1:29:44 PM

Collars In ... NYSE Comp. 9,887.58 -214.83 ...

Jeff Bailey : 11/7/2007 1:27:46 PM

USO $74.06 -1.69% ...

Linda Piazza : 11/7/2007 1:27:44 PM

The SPX's 200-sma is at 1483.18 and its 200-ema at 1476.63. Some will of course be buying automatically on tests of these moving averages, so it could get choppy now as the bulls and bears sort it out.

Jane Fox : 11/7/2007 1:27:24 PM

IF SPX closes below 1490 I will be stepping aside my long Qs and DIA positions but will certainly not be taking a short position until I see further evidence of bearishness. Remember the scenario I was talking about earlier this week, the market will do the most damage to the most people and this may be exactly what it is doing now. Link

Jeff Bailey : 11/7/2007 1:25:59 PM

DUG Alert! $40.25 +3.57% ...

Linda Piazza : 11/7/2007 1:24:45 PM

The SPX hit the 30-minute target and potential support on 30-minute closes and is bouncing from that. I'm going to go back to the 15-minute chart for a moment, long enough to say that as long as the SPX is still producing 15-minute closes beneath the 15-minute 9-ema at 1496.92 and producing new lows, it's still maintaining its short-term tenor. I show additional potential resistance at 1494.44 on 15-minute closes.

Jeff Bailey : 11/7/2007 1:23:46 PM

Dow breadth 30:0 now.

IBM -0.54% #1 weight, BA -0.27% #2 weight, WMT -0.36% #18.

XOM -2.31% #3 weight, AIG -5.23% #13 weight, AXP -5.24% #14.

Keene Little : 11/7/2007 1:20:25 PM

And the stops are getting hit.

Jane Fox : 11/7/2007 1:19:46 PM

Target hit at 13423. YA!

Keene Little : 11/7/2007 1:19:41 PM

SPX 1490. The test is on.

Linda Piazza : 11/7/2007 1:19:35 PM

Now that 1494 has failed, the SPX's target on the 30-minute chart, one I gave over in favor of the 15-minute one, is 1484.65 and there's potential support there on 30-minute closes.

Linda Piazza : 11/7/2007 1:18:18 PM

New low on the TRAN. Tentative bullish price/RSI divergence. That bullish divergence doesn't prove anything other than that bears ought to be vigilant about following your trades lower with your stops. The lower low corroborates that in the SPX and some other indices.

Jeff Bailey : 11/7/2007 1:17:39 PM

Dow breadth negative at 27:3

Keene Little : 11/7/2007 1:17:09 PM

I'll be leaving for about an hour soon to make an airport run to pick up my wife (just waiting for the call). Stick with the downtrend for now and keep pulling your stop down. Let the market tell you when the selling is done.

Jeff Bailey : 11/7/2007 1:16:47 PM

YM 13,463 ... below DAILY S2. Vulnerable to WEEKLY S1.

Jane Fox : 11/7/2007 1:16:41 PM

Lower stop to 13506.

Jeff Bailey : 11/7/2007 1:15:48 PM

YM long stopped alert! 13,476

Linda Piazza : 11/7/2007 1:13:24 PM

I'm watching the TRAN. It did try to push above that 4715 zone that I'd mentioned in a previous post, but it couldn't manage a 15-minute close above it. Now the TRAN is rolling down again. I'm watching to see if there's another new low of the day and if there's bullish price/RSI divergence if there is. The TRAN's previous low was 4682.26 according to my chart, and it's now at 4685.72.

Jeff Bailey : 11/7/2007 1:08:43 PM

I can't type ... YM is LONG at 13,491. Stop is 13,476. Target is 13,517.

Keene Little : 11/7/2007 1:07:03 PM

It's been quite a reversal in silver today--down a dollar from its overnight high at 16.27. I'm beginning to wonder if we might have seen the bottom for the dollar and highs for the commodities. That's an early call but it has the makings of it. Gold hit an important Fib projection last night at 845.37 where wave-C = 162% of wave-A in the A-B-C bounce off the October 2006 low: Link

Jeff Bailey : 11/7/2007 1:06:28 PM

YM long alert! here at 13,991. Stop goes 13,476. Target 13,517.

Jeff Bailey : 11/7/2007 12:57:08 PM

Dow breadth negative at 29:1

BA $97.46 +0.11%

Keene Little : 11/7/2007 12:54:51 PM

If you're short and riding this lower just keep trailing your stop above the downtrend line from yesterday afternoon's high. Stick with the trend for now but don't let it bounce too much against your position (just be careful of the buy program spikes designed to knock the shorts out of the market).

Jane Fox : 11/7/2007 12:54:00 PM

Short from 13482

Linda Piazza : 11/7/2007 12:53:38 PM

Famous last words, but it looks as if Keltner support is trying to firm beneath the SPX. That support has now risen to 1495.04. This Keltner firming of support or resistance is often seen during the lunchtime lull, with the 15-minute 9-ema flattening enough to allow the SPX to travel across toward the other side of its smallest channel. Selling pressure or buying pressure, whichever has been most prevalent, often lessens during that lunchtime lull to allow that to happen. If it does this time, the top of that channel is now at about 1505.50.

There's a problem with "what's typical" scenarios today, though. As I mentioned earlier, I didn't find the sudden push lower about noon to be typical, so I'm not sure we should count on the typical scenario. If prices caved unexpectedly, at an unexpected time, during that time period, they could do so again now. We're about to see. So far, if you're in bearish positions, you just follow the plan that you initiated earlier when contemplating a test of the 1494-ish area.

Jeff Bailey : 11/7/2007 12:54:03 PM

S&P 500 (SPX.X) 1,495 -1.65% ... juuust under 1,498. Testing "cheater's trend" (See Monday's Wrap)

Jeff Bailey : 11/7/2007 12:52:25 PM

Russell 2000 (RUT.X) Alert! 781.65 -2.50% ...

Jeff Bailey : 11/7/2007 12:51:52 PM

TRIN 0.91

Jeff Bailey : 11/7/2007 12:51:43 PM

NYSE A/D 434:2,745

Jeff Bailey : 11/7/2007 12:51:21 PM

YM 13,483 ... session low has been, been, been ... 13,475.

Jeff Bailey : 11/7/2007 12:50:18 PM

McAfee (MFE) $37.57 -4.70% ... undercuts "air pocket" low.

Jeff Bailey : 11/7/2007 12:45:57 PM

USO $74.64 -0.92% ... session low has been, been, been ... $74.12.

Jeff Bailey : 11/7/2007 12:36:51 PM

What a day that's unfolding in the energy complex.

Jeff Bailey : 11/7/2007 12:36:25 PM

DUG $39.45 +1.51% ...

Jeff Bailey : 11/7/2007 12:35:53 PM

Swing trade stopped alert! ... for the US Oil Fund (USO) $74.40 ... fast market here.

Jane Fox : 11/7/2007 12:35:08 PM

I always find it interesting on how the overnight lows will come into play intraday. Notice NQ has not broken those lows and neither has YM but both have tagged them. Poor 'ol Russell has not only broken its overnight lows but is previous day lows as well. Link

Jeff Bailey : 11/7/2007 12:34:21 PM

YM short stopped alert! ... 13,520

Jeff Bailey : 11/7/2007 12:33:34 PM

DUG ... $39.40 .. .

Jeff Bailey : 11/7/2007 12:32:43 PM

USO Alert! $74.90

Linda Piazza : 11/7/2007 12:32:19 PM

The TRAN pierced the supporting trendline of the descending price channel in which the TRAN has been moving since early October and now it's bouncing back to and slightly above that trendline. It's at 4700.37 as I type, testing the 4700 round-number S/R zone. My Keltner channels tell me that until and unless it can close 15-minute periods above about 4716, it's maintaining a downside target of 4653.86.

Jane Fox : 11/7/2007 12:32:20 PM

I see a short YM at 13482. Stop will be 13541 and target 13423.

Jeff Bailey : 11/7/2007 12:28:51 PM

YM Short lower stop alert ... to 13,420.

YM 13,509.

Linda Piazza : 11/7/2007 12:28:06 PM

For you OEX traders, the Keltner level that's analogous to that 1494-ish support on the SPX is at 698.50 on 15-minute closes.

Jeff Bailey : 11/7/2007 12:27:39 PM

YM Target correction alert! ... Target should be 13,475 ... 1-point above DAILY S2 (13,474)

Keene Little : 11/7/2007 12:27:34 PM

Based on the downside pattern from yesterday's high I think the recent lows are going to give way (so SPX break below 1490). Similar to the pattern for SPX that I've been showing at the end of each day recently, the DOW pattern is pointing to the 13150-13175 area for a downside target and potential support. If and when it gets there I'm hoping the pattern will be clear enough to determine whether that support will hold or if it will instead head lower. Link

Linda Piazza : 11/7/2007 12:26:20 PM

Bears should be aware of that potential 1494 support that Keene first mentioned (1494.36 on 15-minute closes according to my Keltner charts), but basically, this has been just a day to follow the SPX lower with your stops. Now you need to think about how you want to treat a 1494 test, if it occurs? Widen your stop so you won't get taken out if there's some volatility around that number? Narrow it so that you will get taken out before too big of a bounce could get started? There's no right or wrong to this. Instead, it depends on how much of a cushion you have, the intended length of your trade (scalp vs. position trade, for example) and your personality. Just don't let a profitable trade turn into a losing one.

Linda Piazza : 11/7/2007 12:17:34 PM

SPX 1500 has been lost, of course. You don't need me to tell you that. The SPX hit potential support on 15-minute closes, now at 1497.96 and is bouncing from that, but as long as it's producing new lows and also finding resistance on 15-minute closes at the 9-ema, now at 1503.91, it hasn't changed its short-term tenor, which is down for today, of course.

The timing of this push is a bit disturbing for bulls, though. Usually by this time of day, markets have started their sideways trend into the lunchtime lull. To break to a new low during this particular period of the day is a bit more disturbing, but we'll see when and if the 9-ema is tested again. For now, the downside target is 1494.58 on the 15-minute chart, with potential support there on 15-minute closes.

Jeff Bailey : 11/7/2007 12:09:23 PM

YM short alert! ... here at 13,531. Stop goes 13,549. Target 13,465

Keene Little : 11/7/2007 12:05:54 PM

It's looking like another consolidation near the lows so I expect lower out of it.

Jeff Bailey : 11/7/2007 12:01:09 PM

That gap higher in the iShares Silver Trust (AMEX:SLV) $154.47 +0.46% Link ... from an 11-month base looks like a "break away" gap.

Jeff Bailey : 11/7/2007 11:58:26 AM

Notable intra-day volume spike in SIL $20.00 just after 11:25 AM EST.

Linda Piazza : 11/7/2007 11:57:17 AM

The TRAN has broken below previous November lows, but is now reaching the bottom of a steeply descending price channel in which it's been moving lower since its 10/05 high. In fact, it touched or nearly touched the bottom of that channel today. What does this mean? First, if the TRAN is leading other indices such as the SPX, OEX and Dow anywhere, it may be leading them ultimately to break November's previous support levels. However, it may also be saying that, unless the TRAN is going to cascade lower, it may soon be time for it to either bounce from this support or just slide down it a bit, but still slow its descent. Keep it on your radar screen.

Jeff Bailey : 11/7/2007 11:42:22 AM

Comcast (CMCSA) $20.45 -1.15% ... hovering at a 52-weeker.

Jeff Bailey : 11/7/2007 11:41:43 AM

DIRECTV 3Q NET DOWN 14% ON HIGHER COSTS

DJ- Satellite-TV operator reports net income of $319 million, or 27c a share, as it spends more to provide customers with high-definition channels and digital video recorders. Revenue rises 18% to $4.32 billion.

DTV $27.03 +3.48% ... that's a new 52-weeker.

Linda Piazza : 11/7/2007 11:43:14 AM

Let's take stock: so far, the SPX has maintained 1500 support. That's on the bulls' side, I'd think.

So far, the SPX has maintained a series of lower lows today, with the 15-minute 9-ema (currently at 1505.15) providing resistance on 15-minute closes. That's obviously on the bears' side. If it continues, we may get a test of whether 1494 support will hold or whether the 30-minute chart's lower potential target will be tested.

Conclusion? Before we even begin to believe that the short-term tenor has changed, bulls need to hold 1498.50-1500 on 15-minute closes and then drive the SPX back above that 15-minute 9-ema.

Jeff Bailey : 11/7/2007 11:39:31 AM

MISHKIN SAYS SMALL BUSINESSES KEY TO ECONOMY

DJ- Fed Governor Mishkin says small businesses 'are critical to the health of the U.S. economy' and ensuring their access to credit and financing 'is clearly a high priority.'

RUT.X 788.59 -1.64% ... (see Monday's Wrap)

Jeff Bailey : 11/7/2007 11:37:27 AM

MBA's Weekly Application Survey at this Link

Jeff Bailey : 11/7/2007 11:36:22 AM

SARA LEE NET DROPS 40%, BOOSTS VIEW

DJ- Net income falls to $200 million, or 28c a share, as year-ago was boosted by gains. Net sales rise 8.3% to $3.1 billion, and adjusted net sales rise 4.5%. Wall Street expected EPS of 27c. Firm boosts full-year view.

SLE $16.01 -1.83% ...

Jeff Bailey : 11/7/2007 11:35:23 AM

TOYOTA'S NET JUMPS 11%, RAISES VIEW

DJ- Japanese auto maker posts its second-biggest quarterly profit ever in the July-September quarter, with sales in Asia surging 45% and in Europe climbing 18%, allowing it to raise its full-year profit forecast. U.S. sales move lower.

TM $111.87 -0.10% ...

Jeff Bailey : 11/7/2007 11:24:14 AM

EIA Weekly Refinery Table that I keep at this Link ... Day's supply of crude oil steady at 20.8 days.

Keene Little : 11/7/2007 11:24:10 AM

For those of you following CFC (I had recommended a short play when it was near $20 in early October), it should continue to work its way lower to below $8. From there I think it could be decent buy, especially if the bullish divergences continue. A stop on a short play should remain just above 18.65 for now (although the last bounce high at 17.51 makes for a slightly tighter stop). Link

Keene Little : 11/7/2007 11:17:15 AM

From Scott (thanks):
Noticed all the readings yesterday on the ISEE were over 200 and so far today they have been way over 200. That will have to change before we're going up again. IMHO

We've got too many call buyers here and from a contrarian perspective that's not bullish.

Jane Fox : 11/7/2007 11:16:52 AM

Internals are not in sync but still quite bearish. Link

Jeff Bailey : 11/7/2007 11:03:09 AM

Strategic Petroleum Reserve ... added another 92,000 barrels to 694.03 million barrels. Up 0.80% from year ago.

Jeff Bailey : 11/7/2007 11:02:05 AM

Heating Oil inventories rose by 640,000 barrels to 48.01 million. Still down 20.20% from year ago.

Jeff Bailey : 11/7/2007 11:01:06 AM

EIA Weekly Inventory Table that I keep at this Link

Linda Piazza : 11/7/2007 10:55:29 AM

After reading Keene's 10:41:58 post, I went back and checked Keltner charts. When I roll down to the 15-minute chart, I get that same 1494-ish potential target and support. Also, when reviewing price action with respect to Keltner channels, I think it's a better fit. Therefore, although the 30-minute channels give a lower potential target, I think we should defer to Keene's judgment that 1494 may be important support, and I think I'll watch the 15-minute chart today. When prices are consolidating, it's sometimes better to broaden the view, but I think it's time to narrow it again to the 15-minute chart. I'll show you the 15-minute chart: Link

Jane Fox : 11/7/2007 10:51:31 AM

AD line is still under -2000 so I would not be thinking long.

Keene Little : 11/7/2007 10:47:05 AM

Two equal legs down for the DOW would be at 13427 which would take it to a new low for the recent consolidation. So potential support would be the recent lows around 13446 down to 13427. If the market were to drop lower then the SPX 1490 level becomes critical again.

Linda Piazza : 11/7/2007 10:42:56 AM

As the USDJPY heads down, so does the SPX. A new low of the day confirms that resistance near 1510-1512 held. That's not good news for bulls, of course, but that round-number possible support at 1500 shouldn't be ignored. What bulls especially don't want to see is the 1490 support lost, with values below that sustained. I hesitate to mention potential targets in this climate, but as long as 30-minute closes are sustained below the 9-ema, now at 1508.17, the SPX now sets up a potential downside target of 1485.56, so bulls want to see the SPX steady and vault back above the 1508 level, at least, if not the 1510-1512 level.

The drop has dragged potential Keltner support down to 1502.58 on 30-minute closes, with the SPX bouncing slightly from 1500 as I type, so it's as yet unclear whether that support will hold on the close of this 30-minute period.

Keene Little : 11/7/2007 10:41:58 AM

Looks like they just couldn't hold it up any longer as we get the next leg down now. In case we're going to stay stuck in a larger consolidation pattern for another day or so, look for two equal legs down from yesterday afternoon's high. For SPX that's at 1494.59 for potential support.

Jeff Bailey : 11/7/2007 10:41:55 AM

DUG $39.00 +0.36% ... reaction low/high has been $38.50 / $39.20.

Jeff Bailey : 11/7/2007 10:41:08 AM

USO $75.86 +0.69% ... reaction low/high has been $74.93 / $76.31.

Linda Piazza : 11/7/2007 10:36:53 AM

The USDJPY is now at 113.10, below that October 22 low.

Jeff Bailey : 11/7/2007 10:36:42 AM

USO $76.04 ...

Jeff Bailey : 11/7/2007 10:36:06 AM

DUG $39.00 ... gets green.

Jeff Bailey : 11/7/2007 10:34:52 AM

DUG $38.61 -0.64% ..

Linda Piazza : 11/7/2007 10:34:06 AM

SPX resistance is now 1509.83 on 30-minute closes. Support, 1504.41 on 30-minute closes. For the OEX, it's 705.50 and 703.01, respectively, for resistance and support on 30-minute closes.

Jeff Bailey : 11/7/2007 10:32:04 AM

US Oil Fund (USO) $75.00 ... fast market.

Jeff Bailey : 11/7/2007 10:31:38 AM

EIA: Crude Oil Inventories down 800,000 barrels.

Jane Fox : 11/7/2007 10:30:25 AM

Sept. wholesale sales up 1.3%, inventories up 0.8%

Sept. wholesale inventory-sales ratio falls to 1.10

Sept. wholesale inventories leanest ever

Jeff Bailey : 11/7/2007 10:29:23 AM

DUG $38.64 -0.56% ... session low has been $38.25.

Jeff Bailey : 11/7/2007 10:28:52 AM

Swing trade long raise stop alert! ... for the US Oil Fund (USO) $75.85 +0.67% ... to $74.40

Jeff Bailey : 11/7/2007 10:24:48 AM

CAPITAL ONE SEES CREDIT LOSSES NEAR $5B

DJ- Credit card and loan issuer says it could record several hundred million dollars more in charge-offs in 2008 than previously forecast, due to persistent loan delinquencies and the troubled housing market.

COF $55.40 -6.74% ...

Keene Little : 11/7/2007 10:24:47 AM

Techs are getting most of the buying attention this morning and getting closer to gap closure. NQ has now retraced the big dump overnight after the European markets opened but not the last 2 points to get its gap closed. The DOW and SPX look more corrective in their bounce and each looks ready to tip back over at any time. The bears need to stay aware of the intervention potential today--keep hitting it with buy programs to keep the shorts running for cover.

Jeff Bailey : 11/7/2007 10:23:27 AM

GENERAL MOTORS LOSES $39B ON MASSIVE CHARGE

DJ- Shares drop 4% as auto maker posts a 3Q loss of $39 billion, or $68.85 a share, after booking a $38.6 billion non-cash charge as it reduces certain net deferred tax assets to comply with federal accounting rules. GM is also stung by a loss at financial arm GMAC and continued weakness in North America.

GM $34.89 -3.51% ...

Jeff Bailey : 11/7/2007 10:21:12 AM

AMBAC FINANCIAL DISPUTES MORGAN STANLEY REPORT

DJ- Ambac climb rebuts a recent Morgan Stanley research note in which analysts downgraded the bond and credit insurer on concerns that losses would force it to raise capital to protect its AAA rating.

ABK $27.00 -2.91% ...

Linda Piazza : 11/7/2007 10:20:41 AM

The SPX has been testing resistance in that 1510-1512 zone, with the high for the current 30-minute period at 1510.05. A new low of the day will signal that the resistance has held while a 30-minute close above it will signal that it hasn't and that the 1514-1516 zone might be tested again. Until then, we just don't have much information.

Jeff Bailey : 11/7/2007 10:18:37 AM

AIG SHOULD OFFER MORE CLUES ON SUBPRIME

DJ- AIG's 3Q report should provide a window on the extent of its exposure to subprime loans since August, when CEO Martin J. Sullivan said he was 'very comfortable' with the insurance giant's U.S. residential mortgage-market holdings.

AIG $60.70 -2.19% ...

Jeff Bailey : 11/7/2007 10:17:15 AM

JP MORGAN UPGRADES UBS TO OVERWEIGHT

DJ- J.P. Morgan upgrades Swiss bank UBS to overweight, taking a 'non-consensus' view of the stock on a long-term basis as the bank's sensitivity risk reward equation is positive for the first time since September last year.

UBS $48.37 -0.73% ...

Jeff Bailey : 11/7/2007 10:15:03 AM

ING 3Q UP ON ABN SALE, LIMITED SUBPRIME IMPACT

DJ- Dutch financial services firm says it booked a 47% rise in net profit in 3Q, but emphasizes that it sees no material impairments on its euro 3.1 billion portfolio of subprime-exposed assets. Net profit up at euro 2.31 billion from euro 1.57 billion.

ING $42.50 -0.23% ...

Jeff Bailey : 11/7/2007 10:13:22 AM

STORM MAY HIT MORGAN STANLEY

DJ- Of all the blue-chip Wall Street securities firms, Morgan Stanley seemed one of the least likely to get thumped by the subprime- mortgage crisis. So why are some starting to sweat about its exposure to this business, asks Randall Smith.

MS $52.79 -3.15% ...

Jeff Bailey : 11/7/2007 10:10:36 AM

10:07 Market Watch found at this Link

Jeff Bailey : 11/7/2007 10:06:20 AM

McAfee (MFE) $38.42 -2.36% ... hit an "air pocket" down to $37.61

Keene Little : 11/7/2007 9:59:43 AM

Banks are getting hit hard again today, down -2.5%.

Jeff Bailey : 11/7/2007 9:58:34 AM

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

Linda Piazza : 11/7/2007 9:55:02 AM

It looks as if the SPX's Keltner support (now at 1504.37) may hold on this first 30-minute close. So far, then, all we can say for sure is that the SPX dropped back to retest a former resistance zone and that it has, so far, tentatively held as new support. There's potential resistance, though, in the 1510-1512 zone, so bulls can't be too comforted with the SPX below that zone again. Right now, I don't think either bulls or bears should be too complacent because it could still go either way.

Jeff Bailey : 11/7/2007 9:54:06 AM

Forex Currencies (Live) Link

EUR/USD 1.46755 +0.81%
USD/JPY 113.30 -1.23%
GBP/USD 2.10395 +0.79%

Jeff Bailey : 11/7/2007 9:51:31 AM

US Dollar Index (DXY) 75.28 -1.00% (30-minute delayed) ...

Linda Piazza : 11/7/2007 9:51:25 AM

The USDJPY is 113.29, still above the October low but still close enough to be considered to be testing that potential resistance.

Jeff Bailey : 11/7/2007 9:50:26 AM

White House: Oil Prices "Entirely Too High"
$100/bbl Oil Price Not A "Magic Number"
No Comment On US Dollar Weakness

Keene Little : 11/7/2007 9:47:26 AM

They're certainly struggling to hold this up off this morning's low but I'm thinking it's got lower to go. The hard part, as always, is figuring out where the buying support will stop and the sellers take over. That's a big gap sitting above. You can bet the Boyz, the Fed and the Treasury are pulling out the stops right now in their activist programs to push as much money as they can into the system right now in an attempt to hold it up. That could make it worse when it stops.

Linda Piazza : 11/7/2007 9:47:14 AM

As Keene had said earlier, the Fed is in a quandary, and I wondered what they would do about repos today. They have announced a $8.750 billion repo for a net add of $8.750 billion, increasing the amount sloshing through the system to $48.000 billion. I had wondered if this extra liquidity had any impact on the dollar, and, if it did, whether the Fed would eschew any repos today, or whether they'd go for the boost for sentiment's sake. Maybe it has nothing to do with the dollar anyway. Just speculation.

Jane Fox : 11/7/2007 9:45:43 AM

AD line is a -1936 so the bears have control this morning.

Linda Piazza : 11/7/2007 9:44:15 AM

We're still within yesterday's range, so nothing horrible has happened yet, and, maybe nothing good yet, if you have strong bearish or bullish hopes. This is just chop. Most of you will have noticed by now that since about 10/22, the SPX has been chopping out another potential H&S on its daily chart, so bears want a sustained (and not quickly reversed) drop below that 1490 zone to confirm it, and bulls want a sustained strong push above the 10-sma to invalidate it. While these H&S's haven't been particularly reliable since 2003, they do help us figure out a little about whether the bulls or bears are currently supreme. The building of this formation shows bearish intentions, but that doesn't guarantee that those bearish intentions will see fulfillment. For now, I don't believe we can say anything for sure, so trade with care.

Linda Piazza : 11/7/2007 9:38:08 AM

The USDJPY is now at 113.26, a few cents above the October low, but still close enough that we can say it's still testing that potential resistance. Equity bulls want to see it continue to climb off this morning's sub-113.00 level, while equity bears want to see this resistance hold.

Linda Piazza : 11/7/2007 9:36:28 AM

The SPX's 30-minute Keltner chart shows potential support at 1504.04 on 30-minute closes. As I mentioned earlier, there's also potential historical support now that the SPX has moved into the congestion zone from the last few days. Will one of these hold? I don't know, but if you're in short-term bearish positions now, be watchful of your profits in this zone.

Keene Little : 11/7/2007 9:31:08 AM

The Fed is in a real jam now. They know the sinking dollar and skyrocketing commodities is inflationary and they're going to need to do something to shore up the dollar. There's really very little they can do except raise rates to go after the inflation. Their bogus numbers say we're not experiencing much inflation yet but we all know it's not true (at least for those of us who use energy products and food). I would imagine there's some real nail biting going on over at the Fed's place right now. Poor Bernanke, he really did get handed a stinky diaper to clean.

Linda Piazza : 11/7/2007 9:25:11 AM

The USDJPY has been recovering a little from its overnight drop since the 8:30 releases. It's at 113.18, up from its low of about an hour ago at 112.76. It's at 113.18. It remains below the October 22 low of 113.23, however, facing what might be resistance now at that October low.

Linda Piazza : 11/7/2007 9:15:27 AM

This is a treacherous market in which to hold positions overnight. Yesterday before the close, the SPX finally sprinted over the 50-sma, the minimum close that I thought bulls needed to accomplish to avoid a deeper pullback, at the least. Traders apparently celebrated CSCO's earnings that will be released after the close today. On intraday charts, the SPX set an upside target near 1526, but I warned not to ignore the 10-sma's possible resistance and asked traders just before the close to consider whether they wanted to lock in some bullish profits, as the SPX had already hit historical resistance and not all potential targets were hit, especially in the current market environment. I hope at least some did.

What now? Futures movements aren't always carried over into the cash markets, but if the SPX's futures' position about 17 points below fair value is carried over, that would drive the SPX down to about 1503-1504. The congestion zone from the last few days produced a number of opens, closes, highs and lows on the 30-minute chart from about 1504.80-1511, so watch for possible support somewhere in that zone. If a drop is stopped in or above that area, and the SPX then gains again, that looks like just a drop back to test former resistance and see if it holds as support. A drop much below that looks much more troublesome.

Jane Fox : 11/7/2007 9:11:03 AM

HONG KONG (MarketWatch) -- Crude oil topped $98 a barrel and gold futures rose as high as $848 an ounce Wednesday after comments from a senior Chinese official suggesting China should consider diversifying some of its foreign reserve holdings sent the dollar to fresh lows.

Gold prices spiked to multi-decade highs on safe-haven buying amid concerns that higher oil prices and dollar weakness could lead to inflation. The front-month contract for bullion leapt $20.03 to $843.70 an ounce in recent London trading, adding to the $12.60 rise Tuesday that took bullion to its highest close since 1980.

Oil for December delivery touched $98.46 a barrel in electronic trading, before easing to $98.19, up $1.49 from the New York close.

Cheng Siwei, vice chairman of the Standing Committee of the National People's Congress, said Wednesday in Beijing that authorities should consider the appreciation of currencies such as the euro when the country purchases foreign bonds with its $1.43 trillion stockpile of foreign-exchange reserves, according to media reports. Later in the day Cheng reportedly said his remarks had been misinterpreted.

Jane Fox : 11/7/2007 9:09:48 AM

WASHINGTON (MarketWatch) - The productivity of the U.S. nonfarm workplace jumped at an annual rate of 4.9% in the third quarter, the fastest growth in four years, the Labor Department reported Wednesday.

Unit labor costs, a key gauge of inflationary pressures from wages, fell at an annual rate of 0.2% in the period from July through September, the lowest in a year.

The productivity and labor-cost figures were much better than expected. Economists surveyed by MarketWatch were forecasting a 3.6% increase in productivity and a 0.8% rise in unit labor costs.

Productivity is measured by output divided by the number of hours worked. As signaled by the strong increase in gross domestic product, output rose 4.3% in the third quarter, while hours worked fell by 0.5%. Read the full report.

The productivity news was good, but old. The concerns today are over how the economy will deal with multiple challenges including the collapsing housing sector, soaring oil prices, the falling dollar, and the toxic waste in banks' balance sheets.

Jane Fox : 11/7/2007 9:07:50 AM

Gold hit a high of 848 overnight.

Crude hit a high of 98.62.

US$ hit a low of 75.08.

Quite an overnight session. Link

Jane Fox : 11/7/2007 9:05:56 AM

I was looking at my charts last night and I noticed the USDJPY and the US$ dropping and it got me to wondering what was happening. Reading Linda's post now explains it all. Needless to say this has affected the equity markets and they all fell as well.

Next set of charts will include Gold - take a wild guess what Gold did last night. Link

Linda Piazza : 11/7/2007 9:03:50 AM

This is a first in a while. No repos mature today. Anything added will be a net add, then.

Linda Piazza : 11/7/2007 7:08:31 AM

As many will have heard by now, a high-ranking Chinese official, the VP of the Standing Committee of the National People's Congress, said last night that China should diversify its currency reserves, shifting some of its $1.42 trillion reserves away from the U.S. dollar and into the euro. That statement weakened the dollar further, and the USDJPY dropped below October's 113.23 low to an overnight low of 113.09. As I type, it's climbed back to 113.19.

As those of you know who read my posts or Wraps, I've long been watching the USDJPY as a sort of indicator of how equities might perform. Although I've questioned lately whether that link between the performance of this currency pair and U.S. equities will always remain as strong as it had been in the past, the immediate and strong reaction in U.S. equities shows that the link survives for now. Other forces are at work this morning to weaken futures, of course, including GM's announcement and the further rise in crude (which is probably at least in part another effect of the weakening dollar) but that announcement last night and the resultant dollar weakness seems to be the greatest influence for now. It's obvious that the dollar and in particular the USDJPY should be watched today for guidance.

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