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Jeff Bailey : 11/13/2007 2:42:11 AM

Citigroup (C) $33.57 Link

On July 26, C generated a reversing lower double bottom sell signal at $48. The resulting column of O from $54 to $46 established a bearish vertical count of $36.

Did the MARKET know something then, that has been revealed today? Yes! At least $13.7 billion in estimated write downs.

C achieved its PnF chart's bearish vertical count of $36 on 11/05/07.

C has EXCEEDED its bearish vertical count and traded as LOW as $31.05 on Thursday 11/08/07.

The MAIN question(s) I ask myself are ... 1) Has C achieved, met, or exceeded some type of BEARISH price objective the MARKET knew about in July? If so, what is a BEAR's further REWARD? With C having achieved its bearish vertical count, the only other place we can turn is to Professor Davis' study. The triple bottom sell signal in a "bear" phase market was found to be profitable for a bear 93.5% of the time with an average gain/decline of 23.0% in 3.4 months on average. From $44, a 23.0% decline would be to $33.88.

2) Has C overestimated, or underestimated their subprime exposure?

Here is the BKX.X, where C had a 6.12%, or #4 weighting as of 11/09/2007. Link

C is NOT a component of the Regional Bank HOLDRs (RKH) Link

C is now the #2 most heavily weighted component in the Financial SPDRs (XLF) at 7.07% weighting. Link

Jeff Bailey : 11/13/2007 12:53:59 AM

Email Question: ... Can some comment on "C" (Citigroup) stock and their prices targets? If you cannot comment on individual sector maybe you can comment on sub-prime issues and how it will affect the sector. And can they comment on financial sector if they cannot comment of individual stock.

Jeff's Reply: See some of this evening's Market Wrap (11/12/07), and Jim's 11/10/07 Market Wrap of announced charges. Link

It sounds as if it is SO DIFFICULT for ANYONE, even the C's , MER's and the MS's to guide right now as they are having a difficult time knowing WHAT sub-prime should be priced, or properly valued at. I do think they are telling investors as much as they KNOW at this time.

If you can, listen to MS's update they gave late Wednesday night at this

Link

They give their view, then answer some very good questions from various analysts on the sub-prime market.

Technically ....

Citigroup (C) has EXCEEDED its BEARISH vertical count (from Point and Figure chart) of $36.00, and that's always a starting point for assessing some downside technical RISK in a stock. According to Jim's Wrap on Saturday, C has announced $13.7 billion in charges so far. I have to ask myself ... "WHY has C exceeded its BEARISH vertical count?"

Merrill Lynch (MER) has not yet ACHIEVED its BEARISH vertical count of $43. A trade at $58 would NEGATE the current BEARISH vertical count with a reversing higher PnF buy signal. Per Jim's Wrap on Saturday, MER has announced $8.4 billion in charges so far. I have to ask myself "WHY hasn't MER achieved its BEARISH vertical count?"

Morgan Stanley (MS) EXCEEDED its BEARISH vertical count of $52 on Wednesday, but hangs around that price level at this point. Per Jim's Wrap on Saturday, MS has announced $4.6 billion in charges so far. I have to ask myself "WHY has MS almost pegged its BEARISH vertical count, and now hovers around that $52.00 level?

Keene Little : 11/12/2007 11:25:01 PM

Tuesday's pivot tables: Link and Link

The DOW and SPX have been chopping lower in what appear to be descending wedges but it's debatable as to whether they're close to being finished or not. A rally back above Monday's high, so back above DOW 13162 and SPX 1465, would say the decline is finished and we're into a stronger bounce. Until that happens we could get another up-down sequence to finish (pink). But there is the possibility that we'll see a minor new low (but not required) on Tuesday morning and then the rally:
DOW 60-min: Link
SPX 60-min: Link

The decline in NDX looks like it might have finished its leg down from the Oct 31st high. The 10-min chart shows the descending wedge pattern for a 5th wave with a potential throw-under finish at the end of the day. This interpretation demands an immediate rally on Tuesday otherwise I'll be looking for a drop down to at least the bottom of a parallel down-channel instead (not shown): Link

Assuming for the moment that Monday's decline finished the 5th wave down in the move down from Oct 31st, we should be set up for a bigger bounce as depicted on the 60-min chart, showing some Fib time and price projections to consider for a bounce into the end of the week: Link and how that might fit into the daily pattern: Link

The RUT has actually been holding up reasonably well and its wave count suggests the possibility for only a minor new low, perhaps to the 760 area, to set up a rally into the end of the week. But Monday's low might have finished the 5th wave down which also means an immediate rally on Tuesday could be the next move. Bulls do not want to even think about a break of 745 from here as it would mean get short and hang onto your hats. Link

OI Technical Staff : 11/12/2007 9:59:59 PM

The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Jeff Bailey : 11/12/2007 9:10:17 PM

Top Energy Story of the Day at this Link

Jeff Bailey : 11/12/2007 8:44:23 PM

Japan: GDP q/q (preliminary) up 0.6%. Forecast was +0.5%. Previous -0.4%.

GDP Deflator y/y (preliminary) down 0.3%. Forecast was -0.3%. Previous -0.3%.

Jeff Bailey : 11/12/2007 7:22:26 PM

December mini-Silver (yi07z) opened $14.45, down $0.34, or -2.29% from Monday's $14.79 settlement.

Jeff Bailey : 11/12/2007 7:19:25 PM

December mini-Gold (yg07z) opens $793.80, down $14.00, or -1.73% from Monday's $807.80 settlement.

Jeff Bailey : 11/12/2007 7:08:58 PM

Forex Currencies (Live) Link

EUR/USD 1.45232 x 1.45252

USD/JPY 109.60 x 109.63

GBP/USD 2.0536 x 2.0541

USD/CAD 0.9692 x 0.96965

Jeff Bailey : 11/12/2007 7:05:10 PM

US Dollar Index (DXY) alert! 76.13 (30-minute delayed) ... sticks its head above Tuesday's DAILY R1.

Keene Little : 11/12/2007 7:13:11 PM

SPX has been chopping lower in what appears to be a descending wedge but it leaves open to interpretation whether it's close to being finished or not. A rally back above today's high, so back above 1465, would say the decline is finished and we're into a stronger bounce. Until that happens we could get another up-down sequence to finish (pink). The other possibility is that we'll see a minor new low (or not) and then the rally: Link

Jeff Bailey : 11/12/2007 5:59:13 PM

Major Global Equity and Currencies Table found at this Link

Jeff Bailey : 11/12/2007 5:25:44 PM

Closing Internals (since 10/08/07) found at this Link

Jeff Bailey : 11/12/2007 4:52:59 PM

Swing trade short lower stop alert! ... for the 1/3 position (786 shares) in Coeur D Alene Mines (CDE) $4.13 -5.49% ... to $4.31

Keene Little : 11/12/2007 4:46:21 PM

And now back to the market. The RUT has actually been holding up reasonably well and its wave count suggests only a minor new low to set up a rally into the end of the week. The 760 area looks good for potential support. Bulls do not want to even think about a break of 745 from here as it would mean get short and hang onto your hats. Link

Keene Little : 11/12/2007 4:47:22 PM

If you're wondering what the tech traders were eating that made them sick after Halloween I hear they munched on too many caramel covered AAPLs, chocolate covered GOOGlers, some raspberry RIMMs and jumpin' JNPRs.

Jeff Bailey : 11/12/2007 4:34:28 PM

Closing U.S. Market Watch found at this Link

Keene Little : 11/12/2007 4:26:33 PM

It's after hours so I hope I don't offend anyone but considering the selloff in the NDX following Halloween, it would appear that a few too many tech traders may have eaten a few too many sweets and paid the price with a sick stomach: Link

Jane Fox : 11/12/2007 4:07:13 PM

Economic reports on the docket tomorrow include:

10:00AM Sep Pending Home Sales Index. Previous: -6.5%.

2:00p.m. Federal Budget. Expected: -55B. Previous: +111.56.

Keene Little : 11/12/2007 4:07:57 PM

A two-month rally in the NDX (from the end of August), the strongest index following the August lows, has been wiped out in just 4 days. When momentum players run for cover it can be an eye opener. This is why when you play momentum it's vitally important to follow it up and be ready to exit with at least most of your profits: Link

I'm still thinking the setup is here for a rally into the end of the week. It's time for the bears to get spanked for getting too greedy here. So if you're short it's your turn to tighten up those stops.

Linda Piazza : 11/12/2007 4:00:26 PM

Equal high on the VIX or nearly while the USDJPY is far from producing an equal low, at least so far. These are minor bullish divergences as the SPX dropped to a new low of the day. This, then, warns bears to be watchful, but only minor ones so far.

Jeff Bailey : 11/12/2007 3:57:45 PM

US Dollar Index (DXY) ... at 03:00 EST, "closed" 76.01.

Daily Pivot Levels for tomorrow will be ... 75.72, 75.86, Piv= 75.97, 76.11, 76.22.

Note Overlap of DAILY Pivot with WEEKLY 61.8%. (see DXY chart at 02:37:53).

Linda Piazza : 11/12/2007 3:55:16 PM

So, we have direction now as the SPX breaks through support that it hammered out last week. There's a descending channel that's been forming since Thursday afternoon, and its support is being violated, but only minimally so far. There's still a chance that the SPX could bounce back above channel support at about 1443 and, who knows, go on to push up through the top of the channel and break out.

This action now, though, is why I keep warning that we're still in a sell-the-rallies environment and that only gunslingers (my 9:51:34 post) should be participating in longs in this environment. I post information for the benefit of those who might be in longs but haven't been recommending them. We should get a relief bounce one of these days and it could be brutal to those in bearish positions, as such relief rallies often are, but there's just too much danger of markets cratering any moment. Better to miss a great rally and be doing the shoulda/woulda/coulda song about not participating than to go long and lose a bunch, doing a shoulda/woulda/coulda keening over what you've lost in real money, not opportunity.

Keene Little : 11/12/2007 3:50:21 PM

So much for a bounce into the close, or finding a bottom. Instead I'm now watching for where today's decline for SPX will have two equal legs down--at 1437.65 (as part of a slightly larger descending wedge). This market continues to stay weak but the strength of the selling appears to be abating so it could be risky chasing it lower. It might be just a little more fear of the dark as fewer people are willing to hold long positions overnight now.

Jeff Bailey : 11/12/2007 3:41:38 PM

Goldcorp (GG) $32.50 -6.50% ... probes its $32.50 strike. November's Option Montage at this Link

Jane Fox : 11/12/2007 3:34:13 PM

NDX has now lost more than 50% of the rally from August lows. Link

Jeff Bailey : 11/12/2007 3:31:36 PM

SPX November Options Montage ... OI is as of Friday's close (all exchanges). Today's Option Volume is CBOE only. Link

Jeff Bailey : 11/12/2007 3:23:16 PM

SPY November Options Montage ... OI is as of Friday's close (all exchanges). Today's Option Volume is CBOE only. Link

My "eyeball" for a November Max Pain theory value would be about $147.00.

MONITOR your VIX.X and 26.29 measure.

Remember October's Op-Ex was modestly BEARISH below the $150 strike.

Keene Little : 11/12/2007 3:23:00 PM

This NDX 60-min chart shows a potential wave count for the completion of a 5-wave move down from Oct 31st and if true then it's a setup for a good rally into the end of the week. I'm showing some Fib time and price projections that could take NDX back up to near 2150 by next Monday: Link . But first it needs to find its bottom and then break its downtrend line, currently near 2020.

Jeff Bailey : 11/12/2007 3:15:12 PM

Last 2 and Current WEEKLY Pivot Matrix found at this Link

Index Option Traders should have some idea WHERE THE Open Interest is at!

VIX.X has been RISING (more put buying/call selling) than (put selling/call buying) in recent weeks.

Keene Little : 11/12/2007 3:13:45 PM

Keep an eye on the downtrend line on NDX from last Thursday afternoon--if the bulls can break that then there could be a playable bounce. Who knows, maybe even a bonafide rally into Friday.

Linda Piazza : 11/12/2007 3:12:58 PM

Nothing, nada, that tells me next direction. I know that some of you are in Nov bull put credit spreads and you're just aching for the indices to climb higher, bringing your positions out of danger. I wish I could offer real signs that would tell you either that those positions are going to be safe or else that it's time to take advantage of this lull and exit the positions. I'm out of all November positions and didn't do any bull put spreads in November anyway, but I've certainly been in your spot in other option expiration periods, so I can almost feel that pained concentration on each jit and jot in the markets. I just don't see anything definitive either direction.

Keene Little : 11/12/2007 3:09:18 PM

These equity rallies keep getting sold into. I was hoping we'd see SPX rally up to its 1467 target (maybe DOW 13200) to set up the next shorting opportunity (other than just scalp plays) but the techs are about to drive to new lows again. But NDX is showing some bullish divergences at the new lows since Friday so if that continues to chop lower then it could set up a decent bounce play.

Keene Little : 11/12/2007 3:01:39 PM

My last update on gold last week (Wed., 11/7) I showed a Fib projection for the move up at 845.37 ( Link ) and mentioned that shorting gold is a risky venture but that that level presented the best place to try a short. I mentioned a break below 780 is needed to declare a high for gold is in but that a break of its uptrend line on RSI would be a heads up in that regard.

With today's steep decline the RSI uptrend line has been broken sharply so I expect price will soon do the same: Link . While it's possible gold will jump back up sometime in the near future to retest its high I think any bounces now will present shorting opportunities. The next big move will be down and back below $650 (probably head for $500 into next year). Sorry goldbugs, just calling it as I see it from an EW perspective.

Jeff Bailey : 11/12/2007 2:57:40 PM

Reminder! Friday is November Option Expiration.

Jeff Bailey : 11/12/2007 2:54:56 PM

S&P Depository Receipts (SPY) $145.82 +0.46% ... this morning's trade at $144.75 (session low $144.74) did have the SPY trading its MONTHLY S1. Last to do so of the major indexes (INDU/DIA, SPX/SPY, OEX, NDX/QQQQ, RUT)

Jeff Bailey : 11/12/2007 2:50:34 PM

e*Trade (ETFC) $3.59 -58.20% ... Most active at the NASDAQ.

Jeff Bailey : 11/12/2007 2:48:26 PM

Sector Losers ... Gold Bugs -6.03%, Oil Service -3.87%, Oil -2.87%, Nat. Gas -2.63%, Internet -1.94%, Disk Drives -1.79%, Broker/Dealer -1.47%

Linda Piazza : 11/12/2007 2:47:14 PM

The SPX support mentioned in my 2:18:24 post held. Now let's see if the resistance that has held all day, at 1461.25 currently, on 15-minute closes, also holds. A descending trendline off the Thursday late afternoon high and the Friday afternoon high about 3:15 now crosses at about 1468, and that of course should be presumed to be possible resistance. So, no conclusion as of yet.

Jeff Bailey : 11/12/2007 2:46:32 PM

Sector Winners ... Airline +4.69%, Money Center Banks +3.48%, Regional Banks +2.48%, Retail +2.25%, Homebuilders +1.84%, Transports +1.84%.

Keene Little : 11/12/2007 2:43:01 PM

Looking at the DOW and SPX, after what appears to be a 3-wave bounce this morning followed by a 3-wave pullback we could now get another leg up to give us a larger 3-wave bounce off this morning's low. If so then equality in the bounce would be at SPX 1497 and at the downtrend line from last Thursday's afternoon high. That's just a thought since this choppy price action could go anywhere. This kind of move would look like the end of the 4th wave correction I showed on its 60-min chart ( Link and is shown closer on this 10-min chart with today's price action now: Link

Jeff Bailey : 11/12/2007 2:37:53 PM

US Dollar Index (DXY) 76.03 +0.83% (30-minute delayed) ... Here's my updated 60-minute interval chart with new WEEKLY Pivot retracement (blue) Link

Action I'm seeing in various gold mining equities suggests at least a test of WKLY R1 tomorrow.

Keene Little : 11/12/2007 2:28:20 PM

As long as the techs keep getting hammered lower I don't see much bounce potential for the rest of the market. The techs are a good proxy for the bullishness of the market and without that bullishness we'll likely continue to see selling into the rallies.

Linda Piazza : 11/12/2007 2:18:56 PM

Potential support for the OEX at 673.89.

Linda Piazza : 11/12/2007 2:18:24 PM

Potential support being tested now by the SPX, with the SPX at 1449.96, with that support just below the 1449.58 level reached just a few minutes ago.

Linda Piazza : 11/12/2007 2:15:28 PM

No big changes can be found on my intraday charts, so there's still no strong prediction of next direction. There's a slight weighting toward resistance being stronger than support, but that's been true all day and it hasn't meant anything other than showing that bulls might have trouble sustaining gains, which they did. What's becoming clearer is that bulls need to see the SPX close 15-minute periods above the 45-ema on that chart, with that at 1461.66 currently. It's been tested across four 15-minute candles during the course of the day and has held each time. No predictions.

Jane Fox : 11/12/2007 2:05:05 PM

Hit target at 13088

Keene Little : 11/12/2007 1:44:29 PM

The choppy price action continues to make it a challenge figuring out what's next. It's still very possible we're going to see another leg down to finish a 5-wave move down from Oct 31st. Right now the DOW has been struggling on the bounce back up to the bottom of an older parallel down-channel from the Oct 11 high and at the mid line of the new parallel down channel from Oct 31st. It's starting to drop now and NDX is making new lows. The DOW could make it down to near 12800 if it drops back down to the bottom of its down-channel: Link

Jane Fox : 11/12/2007 1:35:21 PM

I see a YM short at 13113 with a stop at 13146 and target 13088.

Linda Piazza : 11/12/2007 1:26:21 PM

Thanks for the 1:21:33 post, Keene, adding input. In the mid-October drop, the utilities, consumer staples and healthcare were certainly being sold along with everything else.

Linda Piazza : 11/12/2007 1:23:49 PM

We're in that lunchtime lull period when the SPx's 15-minute 9-ema flattens out and the SPX trades back and forth across it without the movements meaning much. This time, today's action has flattened all the channels, not just the 9-ema, which is the basis line for one of the channels. Such flattening is often preparatory to a stronger move, but that stronger move sometimes doesn't occur for hours or sometimes even days. Right now, the SPX's Keltner resistance and support are evenly matched above and below it on the 15-minute chart at least, so there's no evidence at all that I can point to and say, this or that is likely to occur.

Jane Fox : 11/12/2007 1:21:37 PM

Looks like Gold is trying to find some support here. Link

Keene Little : 11/12/2007 1:21:33 PM

Linda, I'd like to add one comment to your 1:11 PM post. One major difference that could catch of lot of traders leaning the wrong way when thinking about normal intermarket relationships is that this time it could truly be different. The credit bubble that was created, primarily since 1998, has literally floated all boats. All asset classes have benefitted from the excess liquidity and we've seen "rolling bubbles" starting with the tech boom, moving to real estate and other commodities.

A collapse of the credit bubble will therefore take down all asset classes and therefore the thought that money will rotate out of one asset into another (which has typically been true in the past) will probably not play out this time around. Have you noticed how well equities and gold have been trading in synch (and the other commodities)? We will probably see commodities and equities drop together.

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

Reader Question: What if commodities have topped for now and all that $ flows out of spec commodity plays into big cap growth. Would certainly improve consumer moods if inflation drops with commodities plunging. Oh, I forgot, there is no inflation, what was I thinking?

Response: That would certainly improve consumer sentiment, but what if we're in the part of the economic cycle when it's utilities, consumer staples, healthcare and other safe-haven type securities that benefit from the money taken out of commodities? I was seeing that bit into Thursday, although I'm not today. I didn't see it at all in the drop through October 19, though, but everything, all sectors were dropping then. That might be a bit more negative if we see money rolling out of the high-flying commodities into those presumed safe havens. As is usual, I remind everyone that I don't have a strong background in economics, so I'm learning right along with the rest of you.

Linda Piazza : 11/12/2007 12:51:54 PM

The TRAN hit the resistance I talked about earlier and pulled back from it. The TRAN is now at 4666.80, dropping back just a bit. Equity bulls would like to see it hold at least above 4650, if not higher, on 15-minute closes and to keep battering away at the Keltner resistance.

Jane Fox : 11/12/2007 12:45:20 PM

VIX and S&P futures are in sync today. Link

Keene Little : 11/12/2007 12:35:07 PM

They're liking the blue chips again and shunning the techs. Essentially it's just money sloshing back and forth at this point.

Linda Piazza : 11/12/2007 12:31:37 PM

The USDJPY is now at 109.91, challenging presumed resistance at 110.00. That resistance extends up to about 110.07 and is then layered above that.

Linda Piazza : 11/12/2007 12:25:44 PM

At 4671.40 as I type, the TRAN is reaching closer to potential resistance on 15-minute closes, at 4685.18 and then 4706.92. These are close to Thursday afternoon's high at 4709.51. OEX, SPX and Dow bulls want to see the TRAN power through all those potential resistance levels while bears want to see it roll over from those levels.

Linda Piazza : 11/12/2007 12:20:57 PM

The VIX is dropping again. I would be very careful about my bullish plays if the VIX should drop to 26.72-27.03. That zone marks Keltner support on 15-minute closes that was touched late Thursday afternoon, at the close, and beginning about 2:40 Friday afternoon, with the VIX bouncing hard both times. Decide now how you'll treat such a test of VIX Keltner support, if it occurs and if you're in bullish plays. The VIX is at 27.91 as I type.

Jane Fox : 11/12/2007 12:13:43 PM

Rut futures have breached their Previous Day Highs. Link

Jeff Bailey : 11/12/2007 12:13:01 PM

iShares Silver (SLV) $145.19 -5.04% ...

Jane Fox : 11/12/2007 12:11:09 PM

Internals are bullish but you want to have the VIX make new daily lows and AD Volume to new daily highs. Link

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

Swing trade short alert! for 1/3 position in shares of Coeur D Alene Mines (CDE) at the bid of $4.24.

Stop goes $4.45 to begin. Target $3.90.

Jane Fox : 11/12/2007 12:04:00 PM

SAN FRANCISCO (MarketWatch) -- Crude oil opened sharply lower Monday on speculation members of the Organization of Petroleum Exporting Countries may consider increasing their output at an upcoming meeting.

Crude-oil futures traded on the New York Mercantile Exchanged dropped $2.27, or 2.4%, to 94.05 a barrel. It fell as low as $93.54 overnight in electronic trading.

Saudi Arabia's Oil Minister Ali al-Naimi said Sunday that OPEC, which controls more than 40% of the world's oil production, will discuss increasing production at its next meeting later this year, the Associated Press reported.

"Gulf countries do not control prices but they try as much as possible to secure supplies and market security," Ali al-Naimi said.

Linda Piazza : 11/12/2007 11:59:48 AM

The TRAN is holding up fairly well, currently just testing it 15-minute 9-ema rather than falling beneath it as are the SPX and OEX. It's outperforming, and that's still what equity bulls want to see. Of course, that's cold comfort if the SPX, OEX and Dow give way. There's no guarantee of anything, especially to the upside, today, so keep your stops in mind.

The USDJPY is at 109.68, pulling back a little after it approached the 109.85 level that marks the 45-ema that's been resistance on 15-minute closes.

Keene Little : 11/12/2007 11:59:38 AM

The DOW stopped near its downtrend line from last Thursday afternoon's high which could be the top of a descending wedge pattern that I showed on its 60-min chart last night. That interpretation suggests we'll see the market head for new lows from here. That's the risk anyway if you're currently long this morning's bounce.

Jane Fox : 11/12/2007 11:57:14 AM

NEW YORK (MarketWatch) -- Gold futures fell 3% early Monday, as a rebound in the U.S. dollar and a spike in global risk aversion gave traders reason to lock in profits following the metal's recent bullish run.

Gold for December delivery dropped $26.50, or 3.2%, in early action to stand at $808.20 an ounce on the New York Mercantile Exchange.

Other metals prices also posted sharp losses. "You are seeing a huge sell-off trade in gold off the back of a massive carry trade unwind this morning," said Zachary Oxman, a senior trader at Wisdom Financial.

Linda Piazza : 11/12/2007 11:46:17 AM

The USDJPY has risen to 109.72, facing resistance at 109.85 on 15-minute closes.

Jeff Bailey : 11/12/2007 11:41:02 AM

US Oil Fund (USO) $73.09 -2.24% Link ... $0.50 box to match/mirror futures.

Jeff Bailey : 11/12/2007 11:39:21 AM

Oil Prices Fall on OPEC Output Comment ... AP Story Link

Keene Little : 11/12/2007 11:37:54 AM

We've got some short term sell signals popping up here as we near the lunch hour. It could roll back over or else consolidate but I don't see much further upside at the moment.

Jeff Bailey : 11/12/2007 11:30:00 AM

FOREX FOCUS

Start Looking For Verbal Intervention

The central bank intervention chorus probably isn't ready to start singing just yet, but is warming up its vocal chords. This comes as the U.S. currency slides to levels last seen in the mid-1940s, writes Nicholas Hastings.

Jeff Bailey : 11/12/2007 11:27:25 AM

DOJ ARGUES AGAINST MORE MICROSOFT OVERSIGHT

DJ- Justice Department tells judge it sees no reason to extend restrictive antitrust oversight of Microsoft, countering a recent move by a group of states to extend oversight for another five years.

MSFT $33.57 -0.47% ...

Jeff Bailey : 11/12/2007 11:25:02 AM

EXXON CEO SEES NO QUICK OIL PRICE RESPITE

DJ- There will be no immediate respite from current high oil prices from either an increase in supply or consumers reducing their demand, says Exxon Mobil CEO Rex Tillerson at the industry's World Energy Congress in Rome.

XOM $85.67 -1.36% ...

Jeff Bailey : 11/12/2007 11:23:53 AM

US COUNTRYWIDE ISSUES RATINGS WARNING

DJ- Countrywide Financial Corp. warns in a securities filing that further cuts in its credit ratings to junk-bond levels could 'severely' limit its ability to raise money in public debt markets and cause it to lose bank deposits.

CFC $13.51 -2.31% ...

Linda Piazza : 11/12/2007 11:22:41 AM

The VIX is following--according to Keltner setups--Thursday afternoon's scenario. There's potential VIX support at about 27.65 according to that chart, so be careful as the VIX drops toward that level. It's at 28.36 as I type, having dropped to 28.07 a few minutes ago.

The USDJPY is now at 109.42, so it's really not supporting the idea of further equity gains, if the USDJPY still has much sway. This warns bulls to be careful.

I'm watching a few financials, such as C. It's not doing much, either. The point here is that C isn't fully corroborating the idea of equity gains, either, although it is up and it is consolidating near the day's high.

The TRAN is still gaining, so that's good, but it's about to face Keltner and historical resistance. OEX, SPX and Dow bulls should be particularly careful as it faces resistance at 4686.62 and then 4707.39 on 15-minute closes and then Thursday afternoon's high at 4709.51. It's at 4666.32 as I type.

Jeff Bailey : 11/12/2007 11:16:22 AM

HSBC SEEN LIFTING RESERVES FOR SOURING SUBPRIME LOANS

DJ- HSBC's U.S. consumer lending unit is likely to announce this week that it will increase money sets aside for souring subprime mortgage loans, according to analysts who follow the U.K. bank. HSBC Finance 3Q due Wednesday, and will be closely watched a it is one of the biggest subprime mortgage lenders in the U.S. In Friday trading in London, HSBC shares fell 11 pence to 840 pence.

HBC $87.20 -0.83% ... now below my initial BEARISH target of $90.00 from 11/01/07.

Jeff Bailey : 11/12/2007 11:14:31 AM

BAD MORTGAGE DEBT MAY COST BANKS $400B

DJ- Bad mortgage debt may cost banks as much as $400 billion by the time the credit crisis has run its course, according to Deutsche Bank analyst Mike Mayo Major banks have recorded $43 billion in charges so far and warned on another $25 billion.

Jeff Bailey : 11/12/2007 11:13:50 AM

BANKERS SORT OUT SUPERFUND RESCUE PLAN

DJ- Bankers from the U.S.'s three largest financial institutions hash out the structure of a $100 billion fund designed to help thaw a portion of frozen credit markets. Bankers involved in assembling the plan would like to get the superfund up and running by the beginning of the year.

Jeff Bailey : 11/12/2007 11:13:08 AM

E*TRADE SHARES SLIDE ON SUBPRIME, DOWNGRADE

DJ- Shares fall 50% as a Citi analyst downgrades company after Friday's warning that deterioration in the value of its holdings of securities backed by home mortgages has fallen significantly and will lead to a 4Q write-down.

ETFC $4.08 -52.50% ...

Keene Little : 11/12/2007 11:05:18 AM

I found this news item on E*Trade from this morning:

7:40 (Dow Jones) E*Trade (ETFC) shares getting creamed premarket after Citi downgrades shares to sell, citing the possibility of a bank run [emphasis mine]. "The continued negative news flow about charges resulting from its mortgage and CDO exposure, an SEC inquiry and continued deterioration in its financial condition, all increase the likelihood of significant client attrition," firm writes. Trying to liquidate ETFC's loan and ABS portfolio would create more than $5B in losses, firm writes, more than wiping out tangible equity. Firm sees $500M in 4Q write-downs and provisions. Price target of $7.50 includes 15% odds of bankruptcy. ETFC down 30% premarket at $6.01. (PJV)

Just more evidence of how well "contained" the subprime problem really isn't. Those who kept telling us it would be contained, including the Fed, were either less than honest with us or else the "greater fool" theory sucked in some supposedly smart people.

Jane Fox : 11/12/2007 11:03:33 AM

Internals are bullish but notice the AD ratio (upper left chart) is barely above 0. Also notice how the DAX and the USDJPY have a disconnect this morning making me wonder if Linda is indeed correct in her thinking that the USDJPY usefulness as an internal is coming to an end. Link

Linda Piazza : 11/12/2007 10:56:32 AM

The VIX has fallen to the 15-minute 9-ema, but hasn't seriously violated it on a 15-minute close. Still, it's completing part of the scenario that bulls want to repeat the Thursday afternoon scenario as shown in the chart linked to my 10:24:49 post. Please do not consider this VIX action as an all-out validation that bullish plays are going to succeed. If you're in them, know exactly where your get-out place is and honor it if hit. Still, it's doing a little of what you want it to do.

Keene Little : 11/12/2007 10:53:48 AM

SPX stalled at 1460 so it could head back down but I still don't see much more than choppy price action for now.

Jeff Bailey : 11/12/2007 10:50:12 AM

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

ESTABLISHED a stop for the GG-XG at $36.00 in the underlying shares.

CLOSED a portion (30 shares) of the DUG at $44.00.

RAISED stop on the remaining DUG to $39.00.

Jane Fox : 11/12/2007 10:46:12 AM

You certainly want to be long the US$ and short Gold - NOW but not for the longer term. Link

Jane Fox : 11/12/2007 10:39:36 AM

Head and shoulders on the RUT suggest a low of 723.

Keene Little : 11/12/2007 10:34:57 AM

Pushing right back up again. Stopping out both sides. Two equal legs up off this morning's low for SPX would be 1460.36 and would be the first level I'd watch for failure. Otherwise a bounce back up to 1470 as part of a larger consolidation (shown on last night's 60-min chart) could be in the works here.

Jane Fox : 11/12/2007 10:34:40 AM

THe Head and Shoulders on the DOW charts suggest a target of 12667.

Jane Fox : 11/12/2007 10:33:34 AM

The head and shoulders on the SPX chart is telling me it has the potential to of hitting 1406. Link

Linda Piazza : 11/12/2007 10:29:00 AM

According to the evidence on the chart linked to my 10:24:49 post, you equity bulls want to see the VIX drop below about 28.69 and begin sustaining 15-minute closes beneath that level. Then you want the VIX to crater. The VIX is at 29.17 as I type. I'm certainly not recommending bullish plays as my view is that although there could be a massive relief rally at any time, the risk of markets cratering at some unknown point remains, but I do know that some adept scalpers out there will be trading bullish trades at some point.

Jeff Bailey : 11/12/2007 10:28:56 AM

Swing trade put establish stop alert! ... for the Goldcorp GG Dec $35 Put (GG-XG) at $36.00 in the underlying.

GG $32.75 -5.78% ...

GG-XG are currently $3.30 x $3.50.

Linda Piazza : 11/12/2007 10:24:49 AM

When I look at price charts, I get the feeling that prices are trying to steady preparatory to a bounce attempt. When I look at the VIX, I'm not yet getting the feeling that the VIX's movements will necessarily be supportive of equity gains, although that could happen. The VIX is positioned much as it was about 1:00 Thursday afternoon before the afternoon rally, at least on a Keltner basis. Link So, there's the possibility that the VIX could do what it did Thursday afternoon while equities gain as they did then, but that doesn't mean that it's going to happen. The markets are still jittery.

Linda Piazza : 11/12/2007 10:20:34 AM

Markets are having trouble taking any direction so far.

Jeff Bailey : 11/12/2007 10:20:15 AM

Swing trade bearish long raise stop alert! ... Let's raise the stop on the remaining 31 shares (1/8 position) in the UltraShort Oil & Gas (DUG) $43.94 +6.13% ... to $39.00 (from $37.90).

WKLY Pivot Levels are $37.25, $39.33, Piv= $40.53, $42.61, $43.81.

Jeff Bailey : 11/12/2007 10:13:19 AM

Swing trade bearish long sell/close partial alert! ... Let's sell 1/2 of the current position in the UltraShort Oil & Gas (DUG) at the bid of $44.00, LIMIT $43.81.

Selling 30 of the 61 shares.

Keene Little : 11/12/2007 10:11:06 AM

Spike it up, sell into it, rinse and repeat. That pattern has not been broken yet.

Linda Piazza : 11/12/2007 10:10:26 AM

The TRAN's value hasn't changed much. It's now at 4637.35. The USDJPY is at 109.36, however, pulling back a bit after its first close over the 15-minute 9-ema since 4:30 EST last night. It's just a few cents below that 9-ema now, so it's essentially testing it, but bulls would like to see a bounce back above 109.50 before the end of this 15-minute period, at least.

Linda Piazza : 11/12/2007 10:07:48 AM

The Fed has not announced any repos today. None matured today, either. No net drain nor any net add.

Jane Fox : 11/12/2007 10:01:59 AM

Here is a daily chart of Crude and it is giving me the impression it could retreat all the way back to $85.00/bl. Link

Linda Piazza : 11/12/2007 9:59:59 AM

If markets should keep climbing, watch the TRAN at 4709.37, its Thursday afternoon peak high. I show potential Keltner resistance at 4690.65 and then again at 4707.34 on 15-minute closes, so there are several layers of resistance converging there. The TRAN is a kind of indicator index at times for the SPX, OEX and Dow, so bulls would like to see it plow handily through that upcoming resistance and stay above it. The TRAN is at 4635.96 as I type.

Jane Fox : 11/12/2007 9:56:08 AM

The bulls have been able to pull the AD line back above 0 and is now at +125. AD volume is also above 0 now.

Keene Little : 11/12/2007 9:56:00 AM

The buy program, especially on the techs, quickly ran out of steam. I'm thinking we're going to see a choppy day with lots of whipsaws as we either consolidate further (with more upside before tipping back over) or chop lower. Unless you like scalping quick moves I don't see a good setup for this morning and flat is a good (if not boring) position for now.

Linda Piazza : 11/12/2007 9:51:34 AM

The SPX's support held on that first 15-minute close and now the SPX bounces. It's time for a relief rally, certainly, and option expiration week would be the time when such a bounce could do the most damage to those who piled into front-month puts, so do protect your profits if you're in such a trade. Markets are so iffy, however, that none but gunslingers or those who can afford to bet some lottery money on a bullish move should be doing so. Like any lottery, you could win big, but markets are jittery across the world. I reported last week that Mizuho in Japan was now saying that it oculd have big losses from subprime and last night, lots of attention was focused on Japanese financials.

Jane Fox : 11/12/2007 9:49:47 AM

VIX is making new daily lows so the bears are losing their grip.

Tab Gilles : 11/12/2007 9:45:01 AM

$EUR:$XJY Euro/Yen correlation remains strong. Further downside for the SPX? Link Link

Keene Little : 11/12/2007 9:42:42 AM

When those buy programs hit they can clearly catch too many traders leaning to the short side.

Linda Piazza : 11/12/2007 9:38:33 AM

Potential SPX support on 15-minute closes is being tested now, at about 1446.80. The SPX is at 1448.20 as I type. For the OEX, the support is at about 674.25 on 15-minute closes.

Jane Fox : 11/12/2007 9:37:40 AM

VIX opens well above its previous day range supporting the bearish position.

Jane Fox : 11/12/2007 9:36:53 AM

AD line is a bearish -883 but off the a low of -916. Nothing bullish about this open.

Jane Fox : 11/12/2007 9:34:17 AM

Here is a daily chart of gold. When this market decides to drop it does not fool around. I am looking for the market to find support around the $800/oz. level to increase my long position. A drop all the way back to $750 is not out of the question however. Link

Linda Piazza : 11/12/2007 9:30:57 AM

The USDJPY has stayed relatively steady over the last hour, but it's certainly still well below Friday's levels. It's at 109.34. Unless some reason that this is low enough that there should be a bounce, this isn't a positive for equities.

Keene Little : 11/12/2007 9:27:17 AM

It was a big recovery in equity futures after the European markets opened. Looks like we'll open up flat and that leaves this morning's initial direction up for grabs. Gold is getting spanked this morning, down $30 or -3.6%. Silver, which is usually more volatile, is down over -5%.

Jane Fox : 11/12/2007 9:19:51 AM

It has been a while since we have seen the US$ and Gold in these trajectories, US$ up and Gold down.

Notice the US$/YEN chart and if you are wondering what is happening read Linda's post at 8:17. I also wonder if this market's usefulness as an internal for the American markets will come to an end with the US$ in a recovery mode. Link

Jane Fox : 11/12/2007 9:14:20 AM

LONDON (MarketWatch) -- Oil and gold futures were lower on Monday, as Saudi Arabia's oil minister told reporters that OPEC will discuss a production hike at its next meeting. Crude futures fell 71 cents to $95.61 a barrel, and gold futures fell $16 to $818.70 an ounce. The dollar rose about 0.7% against both the euro and the British pound, though it was lower against the yen.

Jane Fox : 11/12/2007 9:14:09 AM

Overnight the futures took a hit but they have recovered and made a new overnight high around 5:30. They have come off those highs now but are poised to at least retest the overnight highs. Link

Jane Fox : 11/12/2007 9:04:02 AM

LONDON (MarketWatch) -- A fire near the site of the 2012 Summer Olympics caused smoke to billow over the London skyline Monday, briefly affecting world markets.

The blaze, reported to be at a disused bus station or warehouse, did not cause any injuries, and is not believed to be terrorism-related, police said.

Stock futures took a very brief dip on initial reports of the blaze and as television pictures showed a large black plume of smoke drifting over the city.

They quickly stabilized after authorities said the event wasn't related to terrorism.

Linda Piazza : 11/12/2007 8:17:26 AM

When I first woke this morning, futures were a little higher than they are now, but they were pushed back when it was learned there was a major fire in England. That doesn't seem to be terror related, but the futures haven't yet recovered to their previous flat levels (when compared to fair values). I wanted to warn anyway, however, that the USDJPY has weakened further and is at 109.47 as I type. It's been recovering off its just-reached low of 109.13. Typically a further decline in this currency pair has not been a good thing for U.S. equities.

I was listening to a currency discussion last night and heard that the new carry trade is not borrowing yen to buy something else, but borrowing U.S. dollars to buy a stronger currency. Why would someone sell the oversold yen, a currency trader speculated, when it was the dollar that was weakening.

There are two parts to the carry trade, however. What is being bought with borrowed (or sold) currencies? In the past, U.S. and other equities were zooming up, gaining more than the interest rate needed to carry the borrowed yen. So, U.S. and other equities benefited from the yen carry trade. Would anyone now put borrowed currencies to use to buy U.S. equities? Are they anticipated to gain? If the answer is no among those with enough money to speculate in currency carry trades, then there's not going to be the same correlation in the carry trade (whichever currency pair--U.S. dollar against the Australian dollar, one commentator suggested--now represents that carry trade) and U.S. equity performance.

So far, there still seems to be a correlation in USDJPY movements and U.S. equity movements, but be careful about relying on this too much as an indicator going into the future.

Linda Piazza : 11/12/2007 8:06:47 AM

No repos mature today. There are $40.250 billion repos sloshing through the system, repos that have been made but have not yet matured. I'll let you know if the Fed makes any repos later.

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