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Keene Little : 11/14/2007 11:56:55 PM

Thursday's pivot tables: Link and Link

As bearish as Wednesday afternoon's selloff looked I'm thinking we could see a turnaround and head higher again on Thursday. Ideally the afternoon move down could use a little stair-stepping lower to finish but we may or may not get it. Bears should not get complacent here. 60-min chart updates:
DOW: Link
SPX: Link
NDX: Link
RUT: Link

Jeff Bailey : 11/14/2007 11:19:45 PM

Wish I could sue somebody every time I made a made a wrong decision.

Jeff Bailey : 11/14/2007 11:17:53 PM

Amaranth was the "hedge fund" that didn't keep an eye on their top trader that kept buying Nat. Gas futures all the way down the scale from $14.00 before they realized his convictions about where Nat. Gas was headed didn't match the MARKET's.

Margin call ... see'ya later.

One could say he built his house in the flood plain and didn't really know how to manage the risk.

Yep ... sue JPMorgan. They made millions with their "vulture bid" bail out.

Only in America.

Jeff Bailey : 11/14/2007 11:11:04 PM


DJ- Lawsuit alleges JPMorgan used its position as Amaranth's clearing broker to prevent the hedge fund from transferring the remaining risk in its natural-gas derivatives portfolio to Goldman Sachs and later made false statements to kill a deal with Citadel.

Jeff Bailey : 11/14/2007 11:10:18 PM


DJ- Berkshire Hathaway CEO tells Congress to consider giving lower-income families a $1,000 annual tax credit rather than repealing the federal estate tax, saying he'd give credit to 23 million households with under $20,000 a year in income.

Jeff Bailey : 11/14/2007 11:09:35 PM


DJ- Banks underwriting the $27 billion leveraged buyout of Alltel are increasing the discount on loans by a penny to as much as 4c on the dollar. The banks also plan to cut the amount they are selling to $4.8 billion in the so-called B2 tranche.

Jeff Bailey : 11/14/2007 11:03:24 PM

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

Moved DUG down to Watch List.

After Monday's action, Dorsey's BPOIL did reversed back down to "bear confirmed" status. Today's stop out on the remaining 1/8 position was a "tough one," but I thought there'd be some volatility going into this week's EIA report. Took 1/8 off the table at $44.00 on Monday, made a fractional 2.6% on the rest today (wasn't willing to risk much more gain than that at this point).

Always open to a DIG if needed, or another USO long.

OI Technical Staff : 11/14/2007 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 : 11/14/2007 6:53:57 PM

Scenario: ... You're thinking of building a house in a flood plane area. You can not find any insurance company offering hazard insurance for the home.

Question 1: Do you build the house in the flood plane?

Question 2: If "yes" to #1, do you pay cash for the house?

Question 3: If "yes" to #2, can you afford the RISK?

Jeff Bailey : 11/14/2007 6:46:27 PM

A house you live in is an ILLIQUID asset. Finance that baby 30-years out at a FIXED rate.

Remember who owns any house with mortage on it.

The BANK owns it, not you.

It is the GREATEST deal out there.

LIVE in something that SOMEBODY else owns, where THEY gave you the money to live in it! Nice tax deduction too!

Come next November, we may need ALL the tax deductions, sheltering we can get!

Jeff Bailey : 11/14/2007 6:42:55 PM

When you think about it, roughly 95% of cars are a depriciating "asset." Tough to even buy one with anything more than 3% interest on top of it if you ask me.

Jeff Bailey : 11/14/2007 6:38:58 PM

When I was too young to remember my age, my Grandfather said ...

Read the fine print

Never buy anything but a house and a car on credit. Then never buy anything you can't afford

Jeff Bailey : 11/14/2007 6:31:58 PM

I love it! Blame it on Greenspan, or Bernanke.

Where else but America.

Buy a house at 120% loan-to-value at an adjustable rate of 3%, then blame it on somebody else when rates move up, the price of the asset falls.

Do you REALLY think investors are looking for the Fed to bail out those that don't understand RISK management?

Jeff Bailey : 11/14/2007 5:30:04 PM

Today at 10:19:11 I posted a DowJones Headline ... CALIFORNIA, OHIO, FLORIDA LEAD IN FORECLOSURES ... Does that make sense?

Los Angeles and San Fran are in California. Miami is in Florida.

Ya think the MARKET knows/knew today's news?

Several months ago, DENVER was leading the nation in foreclosures.

Jeff Bailey : 11/14/2007 5:25:16 PM

CME's Feb08 Housing Futures ... See the Nov07 benchmarks into expiration. But note the "negative convexity" still holding to Feb08. Link

Jeff Bailey : 11/14/2007 5:13:44 PM

CME's Nov07 Housing Futures ... dating clear back to 1/03/07 with some "key dates" from HBC/NEW (first real news of subprime), then NFI on 2/21/07, and sharp decline on 2/27/07 attributed to "credit crunch."

I thought it interesting that DENVER and BOSTON (this year's World Series) teams hit new highs for this contract at about the same time. Coincidence for sure, but makes you wonder.

Now, I've also got Feb08, May08, Aug08 building, with some young Feb09 and Nov09.

Here's Nov08 about to expire, but gives you an idea of what the MARKET thinks of housing prices in various regions. Link

These housing futures could well be just ONE derivative a trader/investment house might use to hedge a long position. That how option and futures came to fruition. They were originally created in order for investors to HEDGE RISK.

After my recent property tax assessments, DENVER should be MUCH higher! (wink)

Jeff Bailey : 11/14/2007 4:45:25 PM

USO goes out $72.60 +2.35% ... traded WEEKLY S1 as session high (to the penny) $73.08, but faded a bit from there.

Jeff Bailey : 11/14/2007 4:43:00 PM

Where's that OI at in the Qs?

Jeff Bailey : 11/14/2007 4:40:00 PM

XLF $31.55 -0.37% ... pretty close to WEEKLY R1 ($31.57).

Jeff Bailey : 11/14/2007 4:38:25 PM

VIX.X goes out at 25.94. Pretty close to WEEKLY Pivot.

SPY $147.67 -0.27% .... also pretty close to WEEKLY Pivot.

Reminder! Option Expiration is Friday!

Jeff Bailey : 11/14/2007 4:31:50 PM

China Tel. (CHA) goes out at $72.50 +2.88% ... So here's a "that was then" and "this is now" retracement comparison. Link

By now we've figured out "why" CHA surged from mid-$60 to $97. That was anticipation of more open investment policy.

On 11/05/07 we learn "why" stock couldn't get back above $87-ish.

For now, short covering likely reason for last 2-day's advance.

1st test of more meaningful (other than yeserday's PnF buy signal) is to see a CLOSE above $75.75.

Hint: You can do this with ANY security. Study past HISTORY. Look for SIMILARITY, or DIVERGENCE to guide you're decisions.

Jeff Bailey : 11/14/2007 4:17:25 PM

Good Gravy! ... DUG $42.89 +0.23% at the close.

May be VERY tough for oil (commodity) to make new high near-term.

Jane Fox : 11/14/2007 4:08:01 PM

Economic Reports for tomorrow include:

8:30a.m. Initial Jobless Claims For Nov 10 Week. Expected: +3K. Previous: -13K.

8:30a.m. Oct Consumer Price Index. Expected: +0.3%. Previous: +0.3%.

8:30a.m. Oct CPI, Ex-Food & Energy. Expected: +0.2%. Previous: +0.2%.

8:30a.m. Nov NY Fed Manufacturing Index. Expected: 18. Previous: 28.75. 10

12:00p.m. Nov Philadelphia Fed Business Index. Expected: 5.9. Previous: 6.8.

Keene Little : 11/14/2007 4:03:21 PM

SPX 1466.48 held so that leaves open the possibility for an immediate rally starting tomorrow. I'm not crazy about that interpretation because this afternoon's decline now looks unfinished (looks like it needs at least to stair-step a little lower). But bears should keep in mind the possibility that this afternoon's sharp move down was the completion of a correction to the raly from Monday afternoon and now we'll head higher again.

Keene Little : 11/14/2007 3:54:41 PM

If we had wave-a down this morning followed by a triangle b-wave then wave-c down (the current drop) will be equal to 162% of wave-a at SPX 1466.48. If that doesn't stop it (getting close as I type) then the bottom of its larger down-channel is near 1460.

Keene Little : 11/14/2007 3:40:15 PM

Suddenly letting go here. It's looking like the pattern in the techs and small caps may be ruling the late afternoon here. But keep an eye on SPX's broken downtrend line from Oct 31st, currently just under 1474.

Jane Fox : 11/14/2007 3:39:32 PM

VIx took a big spike upwards and all the markets just followed along with new daily lows. All except the DOW.

Jeff Bailey : 11/14/2007 3:39:05 PM

UltraShort Oil & Gas (DUG) Alert! $42.35

Jeff Bailey : 11/14/2007 3:36:39 PM

We're not done yet ... now take a high/low close retracement on CHA from 07/09/07 to that 08/16/07 low close.

Pretend you bought an out-the-money call when CHA was trading $60.00, then saw the stock get slapped down to the mid-$60's.

Jeff Bailey : 11/14/2007 3:32:22 PM

China Tel. (CHA) ... Now a bar chart. BLUE is conventional inflection high/low closes.

Slap on a MONTHLY Pivot retracement, where after seeing a MONTHLY S2 traded, computers should have a sell bias at MONTHLY Pivot, certainly MONTHLY R1.

Why did CHA trade the way it did? Link

Keene Little : 11/14/2007 3:13:55 PM

The one bearish thing I see is in the techs this afternoon. The pattern from noon looks more like the early part of a waterfall decline. It could suddenly let go to the downside in which case I highly doubt the others will rally. NDX and RUT look similar in this regard and are the two indexes in the red at the moment. They need to get up and go here.

Jeff Bailey : 11/14/2007 3:13:01 PM

Remember THIS from 11/05/07 Link

Probably best explains what took place.

On 11/5/07, CHA closed at, at, at ... $73.35.

Keene Little : 11/14/2007 3:07:36 PM

It's time for liftoff (or crash and burn).

Jeff Bailey : 11/14/2007 3:07:17 PM

Shangai ($SSEC) PnF chart Link ... an another "like market" for CHA.

Jeff Bailey : 11/14/2007 3:06:13 PM

Hang Seng ($HSI) PnF chart Link ... A "like market" for CHA.

Jeff Bailey : 11/14/2007 2:58:28 PM

China Tel. (CHA) ... here's Pnf chart Link

Some SIMILARITY to August/September.

Main difference at this point is that the BEARISH resistance trend is getting long, and not as "young."

On a BAR chart, have you placed a CONVENTIONAL retracement on it?

Now, "Note this".

At time of my BULLISH PROFILE, we didn't have the BEARISH resistance trend, as it has only just been put in place after CHA violated its BULLISH support trend (a little more than it did in mid-August). Gosh, remember that BIDU put trade(s) in the BDQ-UJ on 08/16 and 8/20?

Keene Little : 11/14/2007 2:50:38 PM

This pullback should be the last one in the sideways consolidation pattern we've been in today. Buying it, with a stop below the mid-morning low, would be the recommended play as we should see a rally into the close. At least the stop can be kept tight.

Jeff Bailey : 11/14/2007 2:44:23 PM

Coming with a CHA chart.

Jeff Bailey : 11/14/2007 2:44:14 PM

QCOM $41.12 +5.00% ... having a decent day.

Jeff Bailey : 11/14/2007 2:43:23 PM

IF I was currently LONG say 10 or more contracts of the XLF-LG, it might make sense to SELL COVERED say... 5 of the XLF Dec. $35 Calls (XLF-LI) for $0.30 for a credit of $150.00.

This would be an example of RISK/ACCOUNT management.

For just one XLF-LG, a $30.00 credit not worth it in my opinion. Not YET.

Jeff Bailey : 11/14/2007 2:31:27 PM

Listen to the MARKET.

Jeff Bailey : 11/14/2007 2:31:18 PM

Slap a BLUE conventional retracement on LEH from 02/06/07 high close to recent 8/15/07 low close. 50% will likely be tough resistance near-term at $68.90.

If not, then something might be changing?

Jeff Bailey : 11/14/2007 2:29:03 PM

Lehman Bros. (LEH) alert! $67.62 +6.52% ... Breaks above September's relative high.

150-day SMA $66.85, 200-day SMA just ahead at $69.17.

Jane Fox : 11/14/2007 2:28:03 PM

Stopped at 13372. THis has not been a fun market to trade today.

Keene Little : 11/14/2007 2:21:39 PM

It's looking like we could be forming a sideways triangle since this morning's high in which case we should get an up-down sequence to finish the pattern before rallying to a new high (pink): Link . I'm wondering if we'll get that new high tomorrow morning to then be followed by a pullback. Maybe rally up to around SPX 1500 and pull back to around 1465 before setting up a stronger rally into next week. Link

Jane Fox : 11/14/2007 2:12:39 PM

I got a bad fill on the short, filled at 13331. I have seen this a lot today, really fast quick moves then the market dies.

Jane Fox : 11/14/2007 2:11:13 PM

Internals are all over the place. VIX is climbing, AD volume is climbing as well but the AD ratio is falling. DAX and USDJPY are about as neutral as they can be. This is telling me traders out in cyberspace have no more of an idea where this is going than I do. Link

Jane Fox : 11/14/2007 2:08:04 PM

Doesn't this look like a consolidation at previous day highs, which usually resolves higher? Then why am I short? Because my bias is wrong much more than my system is right and my system just went short. Link

Jane Fox : 11/14/2007 1:53:31 PM

Stop on the short if triggered will be 13372 and target 13296.

Jane Fox : 11/14/2007 1:52:11 PM

I will take a YM short at 13334.

Jeff Bailey : 11/14/2007 1:44:32 PM

Good, good, good thought. I'll address it in a second. CHA $73.59 +4.42% ... REVIEW the BSC chart, and ask "why?"

Jeff Bailey : 11/14/2007 1:39:00 PM

Bear Stearns (BSC) $107.26 +6.33% ... OK, now here is an expanded view of BSC's point and figure chart. Look at it, study it, and tie in "the news" dating back to this summer. Think about what they DIDN't DO, in relation to what MS DID DO. Link

One technique I've taught traders and investors over the years is to "look back" at old BULLISH and BEARISH vertical counts. What might they have said about the "future?"

Each GREEN box was a PRICE level that NEGATED the prior BEARISH vertical count.

The "technique" we PnF-ers will use is to simply ask "why?"

Then tie it together, perhaps with the thought that the MARKET is all-knowing.

See the last three BEARISH vertical counts? Why $86, $92 and $92?

See the recent frequency of GREEN boxes?

But UNDERSTAND the trend.

See the more institutional "chop" since late-summer?

I say "institutional" just as we will note on an intra-day basis the "retail chop" of how an index, or stock will SLOWLY chop higher, or lower, making it difficult to trade.

One thing I would have to draw from Jim's wrap on Saturday, and the BEATING BSC's stock has taken the last 52-weeks (-30%) is this is probably ONE stock where a MUCH LARGER write-down than mentioned, is ALREADY in the stock.

Keene Little : 11/14/2007 1:33:48 PM

Another minor new high for NDX, to maybe 2100, followed by a little larger pullback is the move that would set up another strong rally leg into the end of this week or early next week before heading lower again: Link

Keene Little : 11/14/2007 1:28:13 PM

The consolidation near today's high is now looking like a 4th wave in the move up from Monday afternoon. This interpretation calls for another rally leg out of this for the 5th wave and that could see SPX heading up towards 1500 before we see a larger pullback (which would then be followed by another rally leg).

Jane Fox : 11/14/2007 12:46:46 PM

Stopped at 13360 - 12 points loss on that one. That is hard to take after almost getting full profit.

Jane Fox : 11/14/2007 12:42:35 PM

Each case is a little different and since you do not want to risk anything you (I) have a tendency to move the stop too close. Remains to be seen if moving to almost breakeven was good move or not but so far it has been

Jeff Bailey : 11/14/2007 12:42:30 PM

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

CLOSED/Stopped on the DUG this morning. DUG gapped below yesterday's UPWARDLY revised stop of $42.35. Had to adjust lower this morning, but DUG never could get back up to $42.35.

Watch List note: BAC thru USB is "top 10 weighting" in XLF. PINK are from Jim's wrap this weekend, and "top 4" write downs. BSC updates today. See BSC's -30.10% yearly loss? See MER's -33.24% year loss. What was BSC's update today? In Jim's notes, BSC was only reporting a #11 rankinig of write-downs, well below MER's #2 ranking.

Jane Fox : 11/14/2007 12:40:39 PM

I find this one of the hardest parts of trading - what to do when you get A-L-M-O-S-T to full profit.

Jane Fox : 11/14/2007 12:39:54 PM

So far putting the stop at 13360 has being a good plan.

Jane Fox : 11/14/2007 12:35:56 PM

Dateline WSJ - John Thain, CEO of NYSE Euronext, has agreed to take the top post at brokerage house Merrill Lynch & Co., according to a person familiar with the matter.

The move is somewhat unexpected as many insiders on Wall Street were speculating Merrill Lynch's board would tap BlackRock Inc. CEO Larry Fink.

More details are expected shortly.

Jane Fox : 11/14/2007 12:30:28 PM

OK I have put my stop at 13360 just below the swing low at 13362.

Jane Fox : 11/14/2007 12:29:33 PM

Target is 13197 and we have made a high of 13193. I would be putting my stop to breakeven at least.

Keene Little : 11/14/2007 12:27:03 PM

The sideways consolidation at the highs could be considered bullish but the way it's consolidating makes me think we've got another leg down coming. Bearish divergences are popping up as the market tries to push back up towards this morning's highs. So watch for a retest of the high and short it if it doesn't hold.

Jeff Bailey : 11/14/2007 12:22:48 PM

The XLF-KI exited on 10/11/07 for +17.95% at $1.38, currently "no bid"

Jeff Bailey : 11/14/2007 12:20:54 PM

Ugh! ... the WM-XF closed out at $3.20 for +8.47% now trading $7.70 bid.

Jeff Bailey : 11/14/2007 12:18:58 PM

The HBC-WT that was close out for +56.52% at $7.20, currently trades bid $10.10.

Jeff Bailey : 11/14/2007 12:17:51 PM

Countrywide (CFC) $13.63 -0.65% ... right at the benchmark entry for the CFC-XC.

Financial Select SPDRs (XLF) $31.98 +0.97% ...

Jane Fox : 11/14/2007 12:15:02 PM

Much more comfortable with the target at 13397 than the earlier long (that did not trigger) with a target at 13405.

Jane Fox : 11/14/2007 12:13:24 PM

Long from 13372 stop is 13334 and target is 13397

Jeff Bailey : 11/14/2007 12:10:54 PM

Keene ... maybe you can help with that?

Jeff Bailey : 11/14/2007 12:09:09 PM

Now... what about the BEARISH SIDE. What might they be doing?

Jane Fox : 11/14/2007 12:08:44 PM

The order of the day today is staying out of trouble but we still want to make some de niro. I will put a long YM at 13372.

Jeff Bailey : 11/14/2007 12:08:50 PM

Doh! ... Another LEVEL? How about the 10/31/07 CLOSE of MS. Now, we SOLD LONG two (2) of the November $33 calls for a 28.44% gain that day.

Then went LONG one (1) of Dec $33 Calls on what I thought looked like a little intra-day pullback.

MS is the 9th-most heavily weighted stock in the XLF.

Jeff Bailey : 11/14/2007 12:03:43 PM

Now ... there is at least ONE trader I know of that is convinced there is more subprime issues that have NOT been hedged, or accounted for.

As it would relate to MS's chart, that 11/08/07 CLOSE becomes VERY IMPORTANT. As does EACH LEVEL above, and BELOW.

As the MARKET now understands its position, CLOSES ABOVE levels would have to suggest "improvement." Closes BELOW levels would have to suggest "work to be done."

This is how I would "listen to the MARKET."

Jeff Bailey : 11/14/2007 12:00:04 PM

If ANYONE knows of a security with a TICKER SYMBOL that I can get a chart of regarding subprime, I'd love to have it!

My email is jeffoption@comcast.net

Jane Fox : 11/14/2007 11:58:04 AM

YM is climbing now and I am giving alms to the trading Gods for keeping me out of the short from 13106. I do not see a long setting up yet though.

Jeff Bailey : 11/14/2007 11:56:43 AM

So WHY a MS chart, and what can it tell us?

What can other broker updates and THEIR specific position status tell us. NOT what they think, but what they've DONE.

BSC "thought," but MS has DONE something about it. In fact, they started DOING headed into Q1.

Jeff Bailey : 11/14/2007 11:52:29 AM

Morgan Stanley (MS) $55.92 +0.10% ... now here is a bar chart with two (2) retracement.

RED is perhaps a "range" that gives us the MARKET's view of how the MS hedge was working. We KNOW from MS update that they were net short going into Q1, and convexity took place resulting in "net long" as subprime paper went south (lost bids). I'm thinking $60.00 area on MS.

BLUE now begins to define an "all knowing" and what is known is out on the table at this point.

Here's my chart where I tie in the recent 11/07/07 update from the firm. Link

Keene Little : 11/14/2007 11:52:22 AM

Still consolidating. This pattern is getting a little strange here and now look like it could press back up to a new daily high. Either that or just a larger sideways move before another leg down. I'm not liking a setup for either side right here.

Jeff Bailey : 11/14/2007 11:32:00 AM

So... take a retracement from 1/03/07 high. That a starting point for the "hedge" range.

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

"Started putting the hedge trade on in LATE DECEMBER" ...

Jeff Bailey : 11/14/2007 11:30:42 AM

"You go short a defined RANGE of losses ..."

Jeff Bailey : 11/14/2007 11:28:10 AM

Also take a conventional 6/14/07 high close to recent 11/07/07 low close. See the "zone" where their hedge probably went flat, to "net long?"

Jane Fox : 11/14/2007 11:28:08 AM

VIX is hovering at daily highs, AD ratio is hovering at daily lows and the DAX is making new daily lows. These are the signs that have told me the bears have intercepted the ball but have not yet taken over the field (AD line is still a tad above 0 at +150).

Jeff Bailey : 11/14/2007 11:27:05 AM

"Will hedge further when market allows ...."

Jeff Bailey : 11/14/2007 11:26:34 AM

Yes, yes... listening to MS call yet again. Picking up further details when looking at MS's chart.

Keene Little : 11/14/2007 11:25:09 AM

It looksd like we started the next leg down (getting another bounce back up as I type) so assuming we'll see two equal legs down look for ES 1478 and YM 13250 for downside targets.

Jane Fox : 11/14/2007 11:22:00 AM

Market heading up now and fortunately we are not on board. Saved by 1 tick!!!!

Jane Fox : 11/14/2007 11:18:16 AM

YM got down to 13307 so we are not short - yet.

Jane Fox : 11/14/2007 11:17:49 AM

Wilshire 5000 and the SPX trade almost exactly the same. Link

Jane Fox : 11/14/2007 11:16:38 AM

I love the way the SPX charts. Hit 1490 (actually 1492) and came to a screeching halt. Link

Jane Fox : 11/14/2007 11:15:14 AM

Fortunately putting the long YM entry above a swing high saved us from taking a losing trade, which is just as important as hitting a winner.

Jane Fox : 11/14/2007 11:13:40 AM

Stop will be 13352 and target 13260, if filled.

Jane Fox : 11/14/2007 11:13:13 AM

Cancel the long and enter a YM short at 13306.

Keene Little : 11/14/2007 11:06:52 AM

You can see with YM in particular a potential sideways triangle formation this morning. One more bounce to a lower high should finish the pattern so shorting it against the first bounce high at 13373 is a recommended play.

Jeff Bailey : 11/14/2007 11:03:47 AM

Wow! ... just doing this ... Take a "Morgan Stanley Hedge" retracement from its 01/03/07 high to the recent low. This retracement would try to "match" a time period as to MS's update last week. Check out just where the 19.1% retracement is at.

Where do you think the chart of MS would suggest their hedge went from net short, to neutral, to net long?

Jane Fox : 11/14/2007 10:55:36 AM

I will take a YM long at 13375. Stop 13338 and target 13405. Of course if the trade gets to 13400 I would be raising my stop because 13400 is resistance.

Jeff Bailey : 11/14/2007 10:55:23 AM

Again ... Jim put together a FANTASTIC list of some firms in this weekend's wrap Link

Since yesterday, we've had further updates.

Keene Little : 11/14/2007 10:53:52 AM

It's beginning to look like we're going to get another leg up for the correction--either a slightly higher high for the bounce or else it will form more of a sideways triangle (looking at a 3-min chart). If we get a triangle pattern then I'd look for two equal legs down from this morning's high as a profit target on a short play (assuming you haven't been stopped out first). If we get a slightly higher high for the bounce then watch it carefully for a roll back over to short it again for another leg down.

Jeff Bailey : 11/14/2007 10:52:33 AM

Goldman Sachs (GS) $235.67 +1.12% ... firm has CONTINUALLY denied some bloggers assessment of its subprime exposure. It's 11/08/07 close was $209.94.

Jeff Bailey : 11/14/2007 10:51:13 AM

Countrywide Financial (CFC) $13.45 -1.96% ... its 11/08/07 close was $13.47. So right in here.

Jeff Bailey : 11/14/2007 10:49:10 AM

Slect Financial SPDRs (XLF) $31.93 +0.82% ... It's 11/08/07 close was $30.37.

Jeff Bailey : 11/14/2007 10:45:12 AM

EIA's inventory data will be released tomorrow.

Keene Little : 11/14/2007 10:39:14 AM

ES 1492 remains a good place for a stop on a short play for now.

Jeff Bailey : 11/14/2007 10:41:21 AM

Citigroup (C) $36.67 +2.22% ... Remembering the bearish vertical count $36.00 and the pattern of probabilities from Purdue University study regarding the triple bottom sell signal.

I also understand that stocks can exceed bearish vertical counts, sometime never achieve them.

BSC $103.87 +2.97% ... WELL exceeded an bearish vertical count months ago. We found out why. Those traders are no longer with the firm. THEY were evidently overly bullish their position. Didn't understand RISK MANAGEMENT.

Jeff Bailey : 11/14/2007 10:33:27 AM

Morgan Stanley (MS) $55.62 -0.42% ... After updating market participants as to its position (how it was hedged, the status of the hedge) regarding subprime, I've got an alert set at Thursday's 11/08/07 close of $53.68.

For me, that's at least ONE MAJOR benchmark.

I mark Thursday's close as if that is "the price" that market participants were able to digest MS's news, make any adjustments to THEIR position, and move forward.

Jane Fox : 11/14/2007 10:28:55 AM

WASHINGTON (MarketWatch) -- U.S. businesses built their inventories modestly during September but sold more goods than they kept on hand, the Commerce Department reported Wednesday.

Sales at U.S. businesses rose 0.6% in September, the most in two months, while inventories increased 0.4%. The sales and inventories numbers both marked the highest seen in two months.

The ratio of inventories to sales stayed put at 1.27. A year ago, the inventory to sales ratio stood at 1.30.

The report indicates that most businesses still have lean inventories and are positioned well to respond to any unexpected declines in demand. Any rise in demand would have to be met with higher production and employment in the United States or with higher imports.

Much of the data in the report had been released previously. The one new bit of information was the 0.1% increase in retail inventories during September, as the inventory-to-sales ratio in retail dropped to 1.48 from 1.49.

Jeff Bailey : 11/14/2007 10:27:54 AM

Actually Keene ... I listen to the market and its reaction to what firms are saying.

Jeff Bailey : 11/14/2007 10:26:16 AM


DJ- Ducking The Subprime Hit ... The mortgage maelstrom that has been swirling around Wall Street has left few bright spots and a number of casualties. But a handful of firms have managed to stand out, with Goldman Sachs remaining an investment star.

Jeff Bailey : 11/14/2007 10:25:01 AM


DJ- Pakistan's parliament will be dissolved at midnight Thursday, a government minister says, giving details of the process leading to promised general elections, according to an AFP report.

Jeff Bailey : 11/14/2007 10:24:03 AM


DJ- Organization of Petroleum Exporting Countries doesn't see need to add more oil to the market as requested by the U.S., according to group secretary general. Separately, IEA chief says long-term outlook for energy security has worsened. Read more at a glance.

Keene Little : 11/14/2007 10:21:50 AM

Actually Jeff, the market continues to UNDER esimate the coming damage from write downs and a slew of other credit contraction problems, imho. The mortgage problem has a long way to go to unwind the mess that's been created. We've got a lot of bullish fervor in this market that wants to believe things are OK and that Uncle Ben will make things all right.

Jeff Bailey : 11/14/2007 10:20:38 AM

MBA's Weekly Application Survey at this Link

Jeff Bailey : 11/14/2007 10:19:11 AM


DJ- California, Ohio and Florida have more than two-thirds of the 25 cities with the nation's highest foreclosure rates during the 3Q, as the credit crunch and falling home values hit homeowners, according to RealtyTrac.

Jeff Bailey : 11/14/2007 10:18:26 AM


DJ- General Electric CEO Jeffrey Immelt says company expects to have revenue of $175 billion this year, with a profit of $23 billion. In 2006, the company posted revenue of $163.4 billion, with a profit of $20.7 billion.

GE $39.59 +0.96% ...

Jeff Bailey : 11/14/2007 10:17:15 AM

OK ... market has overestimated SLIGHTLY the amount of writedowns.

Jeff Bailey : 11/14/2007 10:16:47 AM


DJ- Bank takes a higher-than-expected impairment charge in 3Q at its HSBC Finance unit as bad debts rise across the U.S. consumer finance business. But charge is "more than offset" by growth across its global operations. Activist shareholder Knight Vinke criticizes management.

HBC $89.22 +0.49% ... right around my bearish target from 11/01/07 profile.

Keene Little : 11/14/2007 10:15:00 AM

I've lowered my ES stop now to 1492, just above the last bounce. It would take me out with a small profit and get me out of the way if it comes roaring back up now. A rally back up from here would leave just a 3-wave pullback and suggest higher highs so I'd rather not be short in that case. The banks have given up their early-morning pop higher out of the gate and so far the daily candlestick is a bearish shooting star reversal signal. But the day is still very young.

Jeff Bailey : 11/14/2007 10:15:05 AM

The dollar just hasn't been able to find a sustainable bid has it? Has backfilled Monday's gap higher.

Jeff Bailey : 11/14/2007 10:12:45 AM

I'm starting to get the feeling, based on observation, that market participants may have overestimated the amount of writedowns.

Jeff Bailey : 11/14/2007 10:11:59 AM


DJ- Brokerage expects to take a write-down of about $1.2 billion in 4Q to reflect a drop in values of securities linked to mortgage loans and says it now has a net short position in U.S. subprime-mortgage loans and securities. The write-down is net of hedges and other offsetting gains.

BSC $104.98 +4.08%

Jane Fox : 11/14/2007 10:10:11 AM

Hit target

Jane Fox : 11/14/2007 10:05:35 AM

Lower stop again to 13386

Jane Fox : 11/14/2007 10:05:11 AM

Lower stop to 13392

Keene Little : 11/14/2007 9:53:23 AM

The short is against resistance so now that we're getting a pullback I'd lower the stop on a short play to a new daily high. Wait for the first bigger bounce to then lower it further.

Jane Fox : 11/14/2007 9:51:50 AM

I am now short YM from 13359.

Jane Fox : 11/14/2007 9:50:29 AM

Stop will be 13426 and target 13327.

Jane Fox : 11/14/2007 9:50:03 AM

I have a YM short at 13359

Jane Fox : 11/14/2007 9:49:47 AM

DAX is making new daily lows and the USDJPY is testing daily lows. VIX is now testing daily highs so the internals are turning more bearish now.

Jeff Bailey : 11/14/2007 9:43:34 AM

Swing trade stopped alert! ... for the UltraShort Oil & Gas (DUG) at $41.40.

Keene Little : 11/14/2007 9:42:20 AM

Big effort to blow through SPX 1490 and hit the stops. But will they be able to hold it? Good place to try a short, tight stop.

Jane Fox : 11/14/2007 9:39:11 AM

VIX opens below its previous day low.

Jane Fox : 11/14/2007 9:38:40 AM

I expected the AD line to be more bullish than it is but it is still bullish at +1221 and climbing.

Jeff Bailey : 11/14/2007 9:37:34 AM

Bearish swing trade long adjust stop alert for the UltraShort Oil & Gas (DUG) $41.90 -2.07% ... to $41.40.

We got gapped at the $42.35, so made the adjustment, and will cinch up if given the chance.

Jane Fox : 11/14/2007 9:37:27 AM

RUT has charged right through its resistance but you expect this renegade to not follow rules. Link

Jane Fox : 11/14/2007 9:35:52 AM

SPX is on its way to test 1490. Expect to find resistance there though. Link

Jane Fox : 11/14/2007 9:32:46 AM

Looks like Gold found support right on cue. Link

Jane Fox : 11/14/2007 9:31:38 AM

Can you say bullish overnight session. Link

Jane Fox : 11/14/2007 9:25:49 AM

Dateline WSJ - WASHINGTON -- Federal Reserve Chairman Ben Bernanke unveiled sweeping changes to the Fed's communications strategy that will double the frequency of policymaker forecasts for economic growth, unemployment and inflation, and extend the forecast horizon to three years.

The new strategy came short of setting explicit numeric targets for inflation, something Mr. Bernanke has long supported. Mr. Bernanke said aspects of inflation targeting, which is practiced by many other central banks, "may be less well suited" to the Fed given its dual inflation and employment objectives.

Still, the changes will give the public considerable more information about the Fed's views on the economy at a time of heightened uncertainty about how the housing slump and credit crunch will play out on Main Street.

The new strategy "will provide a more-timely insight into the [Federal Open Market Committee's] outlook, will help households and businesses better understand and anticipate how our policy decisions respond to incoming information, and will enhance our accountability," Mr. Bernanke said in prepared remarks to the Cato Institute, a Washington think tank.

Keene Little : 11/14/2007 9:21:31 AM

I'm not sure what vaulted equity futures higher after the 7:00 AM low but low to high by 8:30 AM was nearly 20 ES points. That would be a big move during the day but in 90 minutes pre-market it makes it look like a big news item hit. I can't find anything in my limited search so far. And a big move during pre-market hours is always a little suspect since it's too easy to jack futures around in the light volume. We'll see what kind of follow through we get.

Jane Fox : 11/14/2007 9:05:58 AM

WASHINGTON (MarketWatch) -- Fed Chief Ben Bernanke is expected to shed light on Wednesday morning on changes the central bank plans to make in how it communicates to the market and the general public.

Ironically, after a series of leaks, a rough outline of the Fed plans has already emerged. The principal change is expected to increase focus and attention on the Fed's published forecasts by releasing them on a quarterly basis rather than semi-annually.

Analysts said this was a cautious but useful step for the Fed to take.

"It is a useful step forward. They need to move carefully and watch how markets react to it before they go further," said former Fed Governor Lyle Gramley, now a senior adviser to the Stamford Washington Research Group.

Fed watchers will be paying close attention to Bernanke's speech to see whether the new plan stops there.

Jane Fox : 11/14/2007 9:04:47 AM

HONG KONG (MarketWatch) -- Chinese authorities are expected to tighten monetary policy in the near future after surging inflation and robust retail spending figures suggest the economy may be tilting towards an inflationary overload.

Government data released Wednesday showed retail sales rose 18.1% in October from a year earlier to 826.3 billion yuan ($111 billion), the fastest pace of growth so far this year, following a 17% rise in September. For the first 10 months of the year, retail sales expanded 16.1% to 7.21 trillion yuan, the National Bureau of Statistics said in a statement.

Analysts said higher spending reflected robust income gains and the wealth effects from the soaring stock market.

The figures came a day after data showed the consumer price index in October climbed 6.5% on year, matching the 11-year highs reached in August, as the cost of staples foods such as pork and vegetables vaulted.

Jane Fox : 11/14/2007 9:03:37 AM

WASHINGTON (MarketWatch) -- Wholesale prices rose 0.1% in October as food prices rose and energy prices fell, the government said Wednesday.

Meanwhile, the core producer price index, which excludes food and energy costs, was flat.

Economists had expected a 0.1% gain in both the headline PPI and the core PPI.

The PPI had risen 1.1% in September, while core prices had gained 0.1%.

Producer prices are up 6.1% in the past year -- the largest change since September 2005. Core prices are up 2.5% in the past year, which is also the largest change since September 2005.

Jane Fox : 11/14/2007 9:02:15 AM

WASHINGTON (MarketWatch) -- U.S. retail sales rose modestly in October, pushed higher by gasoline and automobiles, the Commerce Department reported Wednesday.

Retail sales rose 0.2% in October after increasing a revised 0.7% in September. In the past 12 months, retail sales are up 5.2%.

Gasoline station sales rose 0.8% on the month, on the heels of climbing 1.8% in September. Excluding gasoline sales, retail sales rose 0.1% last month.

Meanwhile, motor vehicle sales rose 0.2%. Excluding autos, October's retail sales rose 0.2%. Sales excluding autos are up 5.2% in the past year.

Sales excluding both automobiles and gasoline rose 0.1% for the most recent month.

The overall rise in retail sales was just slightly higher than analysts had anticipated.

Linda Piazza : 11/14/2007 8:53:35 AM

I'm taking a day off today. We had another of those big-range days yesterday, so be careful of unpredictable price action today. Happy trading!

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